The banner tow pilot reported that he approached the banner tow pickup point to catch the rope with his tail hook. Shortly after his initial pitch up maneuver to hook the rope, the pilot observed through a small mirror that the rope was not attached to his tail hook. Subsequently the banner lifted off the ground and the pilot could see that the banner rope looked like it was resting on or around his right horizontal stabilizer. Photos taken of the airplane in the air by a witness prior to the accident show the tow rope hooked around the nose gear and looped over the right horizontal stabilizer. Unable to release the banner, the pilot returned to land on the grassy area next to the runway, due to a fear that the banner might get snagged on obstacles located around the runway. As the pilot began his landing approach at approximately a 300 foot per minute descent and was crossing the west end of the runway, he brought the throttle to idle, added full flaps, and tried to maintain 60 mph. As the airplane descended the banner contacted the ground resulting in a significant amount of drag to the airplane. According to the pilot the airspeed began to drop and he attempted to maintain it by further lowering the nose. The airplane then contacted the ground hard, substantially damaging the firewall of the airplane. The pilot reported that there were no preimpact mechanical malfunctions or failures with the airframe and engine that would have precluded normal flight.