While I would LOVE to see a 3.5 long theatrical release of RotK, it will probably end up being just like the first 2 and end up at 3 hours. Anything longer than that and attention spans melt away as well as other things like eyes simply getting tired (for the average movie-goer). DVD releases are more likely to have the extra times mentioned and I can definately see it for TTT as there were many scenes that could have been extended (or added from what I have read and what people have said of the original works).
Either way, I'm all for movie times running longer but going over 3 hours is very rare for any feature film. Most studios won't even consider releasing one (even with the popularity of LotR) that is over that by much.