I was kinda surprised to read about your plan to build a hobbit-like house in Taiwan. It certainly sounds very romantic and all and if circumstances were different, I'd definately tell you to go for it.
Usually, during summertime alone, Taiwan will have at least 5 typhoons. The mountainous area which you have your eye on, regularly suffers from landslides, mudslides, earthquakes and so on, washing away roads, crops and houses. This is definately not a safe area for building a straw house. Growing vegetables there (if you want to become self-sustained) is risky, since they will likely be washed away by a typhoon. Local Taiwanese farmers know about this and for them it's a gamble every time again. Don't be blinded by idealism or romantic ideas, the reality is that you'll be risking a fortune on land that could disappear from under your eyes.
As a tourist, your chances to work are limited, especially in rural areas. You'd have a better chance in the big cities. Also, you'd have to consider that you're not allowed to own any land as a foreigner. And if you want to build anything, it will have to be fully approved by local government (building-codes etc). I doubt a "hobbit-house" will get such approval.
Also, keep in mind that in this rural area, nobody speaks English. Mostly, they'll speak Taiwanese and/or Mandarin, or an Aboriginal language. This will limit your communication severely. How are you going to get things accomplished, if you cannot explain to anyone what you want? That means you'll become isolated and completely dependant on the few people that you know. That will surely drive you crazy in no-time! If you're going to go to a foreign country, it's better to have more than a few friends there...
For the people who might be wondering.... I've been to Taiwan before and am married to a Taiwanese. Though we love Taiwan, we see this is a very risky adventure.
Have a look at this: http://www.taiwanese-secrets.com/typhoon-taiwan.html