According to LuPone's memoir (which is a questionable source), the movie stars listed (Streep, Margaret, Dunaway etc.) were indeed interested in the role because it was the lead in a hugely anticipated musical. However, Prince, Webber, and Rice were soon discovering that almost no actresses could sing the role, and so actresses of LuPone's rank, which at that time meant steadily working but generally unknown, were allowed to audition and were essentially the finalists at callbacks.
It would make sense, though, that they didn't know vocally what they were getting themselves into because the concept album, though a big seller, wasn't such a phenomenon in the US as it was in other countries. "Don't Cry for Me Argentina" was a big hit, but it's not like everyone in America knew "Buenos Aires," "A New Argentina" or "Rainbow High." So when Streep and the Hollywood stars met with the production team and saw the score, it's likely that none of them actually auditioned because they saw the E's, F's and G's they had to hit and knew they couldn't do that.
"Sing the words, Patti!!!!" Stephen Sondheim to Patti LuPone.