This could very well be the truth. In LOTR and the Hobbit these despicable creatures seem pretty nice, but keep in mind that it was Hobbits who wrote all of that and they are in this case biased towards Hobbits. Furthermore, it's interesting that the Hobbits, who could barely read or write, had so much knowledge about their genealogical ancestry: this could merely be an oddity, but it could also mean that they made it up to erase any questions about their rights to the territory.

On top of that, when I was searching through my memory for proof of another theory I have, that Lobelia got screwed over by Bilbo, it seemed suspicious to me that despite their love for genealogy and the fact that they (at least before "the Hobbit") kept their homes to their family, or heirs, there is no mention of any inheritance procedure in any of the books, despite this being more relevant for the Hobbits who wrote the books than for example some random elven language. When Bilbo comes back in the Shire, he was declared dead, but there seemed to be an "auction" instead of an "inheritance". On the other hand, Bilbo bequeaths everyting to Frodo later on.

This use of words raises some suspicion. One possibility is that the "auction" was actually an "inheritance" and that Bilbo tried to invalidate Lobelia's claims to his inheritance in his writings. Tolkien may have omitted the part of the book where inheritance in the Shire is explained to make Bilbo more likable: this part of the book is necessary to make my Lobelia theory, which I will not explain here because it's too long, not just a theory, but a fact.

The other possible reason as to why there is no explanation of the inheritance procedure is because there was no such thing, because the Hobbits didn't live here for that long yet, increasing the probability of the theory mentioned in the above comment.

Furthermore, Sauron wasn't actually an eye, but he was seen by the Hobbits as such. The sun baby may have been angry at the Hobbits (see comment above this one); by showing himself as something resembling the sun baby, he (what even are the sun baby's pronouns?) made them recall the crimes they commited against the Teletubbies.

I may just be wrong though.