I don't have a problem with Dakota Fanning being Jane -- I think she would really excell in that type of role (did anyone see that Hide and Seek movie?? *shivers* She can definitely pull off creepy)
She did say herself that she wants the part of Jane:http://www.etonline.com/news/2009/01/70060/
Was the "Hide and Seek" movie the one where Dakota played Robert DeNiro's daughter? I think he played a psychiatrist who moved to the country with his daughter to start their lives over after the death of his wife (her mom). If this is that movie, Dakota was extremely creepy, scary, and manipulative and it's the first movie I thought of when I heard she was being considered for the part of Jane. (If this was a different movie, forget what I just said! lol)
Anyway, I think Dakota is very talented and has always seemed more serious about her craft than other actors in her age range. I think she can totally pull off Jane's evil side. I wonder if she might even bring a little more credibility to New Moon, particularly for fans who are not very familiar with the Twilight franchise, or those who may have dismissed it as a "teeny-bopper love story", as my husband would say.