Wendy tries to prove a point about how much pressure little girls feel to look like celebrities. Her latest soapbox issue gets her in trouble with everyone at school. It also gets Clyde a new girlfriend.
While the South Park Elementary cheerleading squad is practicing, one of the cheerleaders, Lisa Berger, shows herself as meek and lacking in self-confidence, going so far as to call herself "the fat ugly cheerleader". The squad's captain, Wendy Testaburger, offers encouragement to Lisa, defending her from the annoyed sneers of the other cheerleaders. When Wendy encourages Lisa to project a better self-image, Red and Heidi Turner state she only cares about Butters Stotch, on whom she has a crush. Though Lisa is embarrassed at this fact, Wendy suggests that she ask Butters out on a date to improve her confidence. However, when Lisa does ask out Butters, he rejects her, saying that she is "too fat" for him, causing Lisa to walk away in shame; Clyde Donovan and Craig Tucker laugh at Butters for "getting asked out by a fat girl", while Eric Cartman corrects them, saying that they should rip on her because she's ugly, not because she's fat.
Later, Wendy confronts Butters for being insensitive to Lisa's feelings, but Butters insists that he just prefers slimmer women, noting his celebrity crush, Kim Kardashian. Angered by this, Wendy further criticizes Butters, saying that Kim Kardashian in real life has "the body of a hobbit" and manipulates her image with Photoshop to make average girls feel horrible about themselves, to Butters' disbelief.
Wendy is later summoned to Mr. Mackey's office, after Butters tells Mackey about Wendy's comments about Kardashian. Wendy is stunned that Mr. Mackey is criticizing her, rather than addressing Butters' comments against Lisa Berger, to which Mackey accuses her of being "jelly", a label which she denies. Following this, Kim Kardashian's fiancé, Kanye West speaks before Mr. Garrison's class to explain that Kim Kardashian is not a hobbit. However, as he tries to argue for her, he constantly undercuts his argument by acknowledging the great number of attributes she shares with hobbits, even going so far as to call her to clarify to him that she is not a hobbit.
Later, as Wendy sees Butters walking past the computer lab, she asks him to come and look at something, which Butters does, despite initially believing that she was going to beat him up. In the lab, Wendy uses Photoshop to "improve" Lisa Berger's appearance, in order to prove to Butters how easy it is for someone, like Kim Kardashian, to manipulate their appearance to unrealistic, fantastic levels. However, Butters, oblivious to this lesson, falls in love with Lisa's photoshopped image, believing it to represent her true appearance, and states his desire to ask her out, much to Wendy's shock.
After posting her photoshopped picture online, he prepares to ask Lisa out the next day, only to discover that she is already going out with Clyde. When Wendy sees everyone regarding Lisa's photoshopped picture as her real appearance, including her boyfriend Stan Marsh, Wendy confronts him and states that Lisa is actually "fat and ugly", just as Lisa an Clyde walk by. Lisa calls Wendy "jelly", a label that Wendy again denies.
Wendy is again summoned to Mr. Mackey's office, where he threatens to send her to "jelly school" if she doesn't change her attitude. She is unimpressed, knowing that Mr. Mackey isn't actually on the line with a "jelly school", and tells him that she will change her attitude for the better.
At the Time magazine Person Of The Year Award presentation, as Pope Francis is named Person Of The Year and receives his award, Kanye West storms the stage, interrupting the ceremony, to try and continue to challenge the belief that Kim Kardashian is a hobbit, however he further hampers his argument when he learns from calling her that a new film she's in is, in fact, The Hobbit, which he then says is loosely based on Kim's television show, Keepin' Up With The Kardashians.
Back at the South Park Elementary Gymnasium, the cheerleading squad performs before the student body, but only Lisa Berger gets applause and attention. Following this, the other cheerleaders ask Wendy to create photoshopped images of them, as well, in order to compete with her, which she refuses to do, believing that doing so would further degrade women and encourage further shallow behavior. After Wendy leaves, Lisa appears, now scantily dressed, and tells the girls that if they want to "improve" their looks, they need to go to the gym with her.
At the gym, the girls are taught how to use Photoshop and successfully create manipulated pictures of themselves, and upload them for everyone to see. The next day, all the boys gather on the playground to goggle at the photoshopped pictures of the girls. Stan is sad, seeing that not a single one of the pictures are of Wendy, and leaves to find her. When he brings up the subject, Wendy becomes defensive and shames him for wanting her to create photoshopped pictures of herself, and remarks one of Stan's imperfections, his short legs. This, however, evolves as she continues to list flaws for others at the school, not realizing that they are walking by her, and Stan and is listening. When she does finally notice them, Bebe calls her a "hater" and Mr. Mackey calls her into his office, yet again.
Meanwhile, Kanye West produces a music video in his continuing effort to prove that Kim Kardashian is not a hobbit, but the results are the same as before.
Back at the South Park Elementary gym, the cheerleaders are practicing just as they were at the beginning, except now Wendy is the meek one. And when the other cheerleaders sneer her, Lisa comes to her defense, telling her to have more confidence and recommending that she ask out Butters. Wendy, annoyed, says that she just wants to get back to cheering, but the others will not have it, demanding that she go to their "gym" and get a new self-image, via Photoshop. She angrily tells the other cheerleaders that they are believing in their own "bullshit" and declares that if society won't do anything to stop Photoshop, she will.
Later, Wendy appears on the news with Tom and Tammy Thompson to discuss her campaign against Photoshop, but they too accuse her of being "jelly". Following this, news correspondent Rick tell her that "the jelly school in Aurora", which his head blocks from the camera, is ready to take her in. Wendy calls him out, saying that the "jelly school" he is standing in front of is actually a Dunkin' Donuts, which Rick concedes to, but affirms his belief that she is a hater. Wendy says that she doesn't care about the names people call her and states that she will not rest until photoshopped images are properly labeled as such.
In the middle of the night, as Wendy is sleeping, Kanye West walks in and wakes her. When Wendy asks him why he's in her room, Kanye sits down and tells her a sad story about Kim Kardashian: As a hobbit, Photoshop was the only thing that could make her beautiful. And Wendy was the "Jelly Monster" that wanted to take the magical power of Photoshop away from the hobbit, eventually breaking down into tears as he reads. Wendy begins to feel guilty and admits that she's been "jelly" and a "hater".
The next day at school, Wendy is again in the computer lab, this time with a picture of herself opened in Photoshop. She begins to edit her picture as tears well up in her eyes. When she's done, she sends a mass email of her photoshopped picture to everyone, wipes away her tears, and solemnly leaves the computer lab. It's unknown what happened to her after this.
AV Club gave "The Hobbit" a "B+" rating saying: "Honestly, for most of tonight’s running time, “The Hobbit” felt like a pale retread of the heights attained during the show’s Console Wars saga. As with most recent targets of South Park satire, the idea that people are obsessed with manufactured images of what constitutes “beauty” is hardly new. Neither is the notion that there’s a fine line in the eyes of some between “feminist” and “hater.” And while the running gag of Kanye West trying to convince the world (and himself) that Wendy’s characterization of Kim Kardashian as the titular Hobbit was amusing enough, it was also extremely one-note and repetitive. Not as repetitive as the use of the word “jelly,” but repetitive all the same."
IGN gave "The Hobbit" a "8.7" rating saying: "South Park's "The Hobbit" ended Season 17 on a high note, thanks to a well-thought-out premise and a significant character arc for Wendy (probably her best). Meanwhile, the return of Kanye West made for a wealth of pop culture references that ranged from hilarious to decent. Overall, this year's finale was a great final bow for the season."