Gothampc, it's hard to tell really, I don't read anything referencing the movie in there. But thinking about it, it's true it seems unlikely they'd think she would play Louise in the Broadway show, perhaps they mean the movie. Both the Broadway show and the film for GYPSY and THE MIRACLE WORKER were released in the same year so it's hard to tell exactly which one he is referring to.
Speaking of FUNNY GIRL I read somewhere (maybe this board) that Jule Styne did not want Bancroft to play Fanny and so he made sure to write a score that she couldn't sing, I'm not sure if he was set on Streisand at that point or just did not want Bancroft. Then again, I'm not sure if there is any true to that story in the first place.
Bancroft's performance in THE MIRACLE WORKER is one of the warmest, most fascinating female performances put on film, I'm sure she was as great on the stage version, so I think she made the right choice.
"Some people can thrive and bloom living life in a living room, that's perfect for some people of one hundred and five. But I at least gotta try, when I think of all the sights that I gotta see, all the places I gotta play, all the things that I gotta be at"