Legolas is the Mirkwood king's son, so he would fit perfect in the story. But is Frodo even alive 60 years before the events of LOTR?

Well, his father WAS the king of Mirkwood - and it is known that the Mirkwood elves fought in the Battle of Five Armies, so it would be very easy for him to have a cameo appearance.

They are also bringing back Frodo, and I heard Merry as well (and maybe the others). The way I see it being done, is that it will either be older Bilbo telling the tale to Frodo and the others, or Frodo reading it. It would easily fit too, because the way the Hobbit is written feels like it's being read to you.

The second part of the movie will be part Hobbit stuff (the battle of Five Armies probably, or Smaug ((though I heard they finish with him in the first movie, not sure))) and the dealings with the White Council and their dealing with the Necromancer of Dol Guldur (Sauron), which would tie the Hobbit into The Lord of the Rings.

Obviously there isn't enough source material in the Hobbit to make two full movies, so they are adding stuff Tolkien wrote but wasn't in the Hobbit.

Legolas is the Mirkwood king's son, so he would fit perfect in the story. But is Frodo even alive 60 years before the events of LOTR?

I forgot he was the king's son. But it still feels like a marketing ploy, as he's not in the book. And I think hobbits age like humans, Bilbo just got real old because of the ring making him live longer. Wasn't Frodo in his twenties or something?

EDIT: 55? Really? Jeez, I need to go back and read it again.

He might make an appearance similar to how he stole Glorfindel's part in Lord of the Rings 1978 by Ralphn Bakshi