What were they thinking?

[Maedhros]

Didn't you find the first chapter in the Hobbit a little weird? I mean they get together in Bilbo's house and they supposedly make a plan.
I wonder a plan to what?
"There is a dragon marked in red on the Mountain, said Balin, "but it will be easy enough to find him without that, if ever we arrive there."
Indeed I will," said Thorin, and he fastened it upon a fine chain that hung about his neck and under his jacket. "Now things begin to look more hopeful. This news alters them much for-the better. So far we have had no clear idea what to do. We thought of going East, as quiet and careful as we could, as far as the Long Lake. After that the trouble would begin.
That is why I settled on burglary-especially when I remembered the existence of a Side-door. And here is our little Bilbo Baggins, the burglar, the chosen and selected burglar. So now let's get on and make some plans.
Well, I should say that you ought to go East and have a look round. After all there is the Side-door, and dragons must sleep sometimes, I suppose. If you sit on the doorstep long enough, I daresay you will think of something. And well, don't you know, I think we have talked long enough for one night, if you see what I mean. What about bed, and an early start, and all that? I will give you a good breakfast before you go.
What was their plan then? To steal all of the treasure of Smaug. I ask again, what were they thinking?:(

[Mirkgirl]

There was no plan... and especially no dwarves' or Bilbo's plan...

Unfinished Tales is where more or less the answer can be found.

The plan of Thorin is more of war against the dracon, but when consuling Gandalf, he advices (comands, even) him to go with only a few dwarves and a hobbit. He disagrees but that's Gandalf and he gets what he wants.

So the dwarves do believe Gandalf has a magical plan or something... and what he thinks... I dare not to guess ;)

[Illuvatar]

As I read in the UT, it made quite a bit more sense to me.

See, now the Dwarves had mainly the hopes of revenge against Smaug and of recovering some of thier treasures. Gndalf had bigger hopes and the lust of the Dwarves fit into them very well.

The Dragon Sauron might use with terrible effect. Often I said to myself: " I must find some means of dealing with Smaug"

And it appears that he guided the Dwarves plans very carefully, insisting on stealth as best they could. Even counting on Smaug not recognizing the smell of a Hobbit.

This coupled with the secret door and key at least gave them the hope of recovering some small treasure. But of course the for the greed of a dwarf that would no doubt not been enough.

And it's very fortunate that Gandalf bumped into Thorin so that they had at least some sort of a plan to start with! lol

[Arwen Elf]

They were all eating Bilbo's much-coveted mushrooms.:)