Here's my 2 cents': You're talking about the fall of Saruman:
Hopes are shattered - Theoden and his people's hopes that Gandalf will aid them, when the spell of Saruman's voice kicked in.
Dreams awaken, - when Gandalf laughed at Saruman's words
The old three cornered hat is taken - the historical reference is maybe to the three cornered hat that Haman wore (Haman was a biblical high-official who wanted to destroy all the Jews because Esther's cousin did not want to bow to him - kind of similar to what Saruman was trying to do). The 'hat being taken is symbolic for his plans being thwarted.
Expected things are split asunder: Saruman's staff is
. Not the full quote, though [img]smilies/frown.gif[/img]
As they fall completely under ::wild guess:: Saruman and Wormtongue are completely and officially in trouble when the Palantir is dropped from the tower
Out of thought and the depths of time,
Returning then, sweetly sublime - reference to Gandalf - now Gandalf the White, who, returning from 'out of thought and time' caused Saruman's fall. OR maybe to the Palantir, who also returned out of deeps of time.
Well, I'm probably wrong anyway, but congratulations, Iarwain, for a lovely lyrical riddle! It's lovely and it sticks to mind. [img]smilies/smile.gif[/img]