It was Laurents' idea to have her do it and he approached her with the idea. I just found this interview on the net:
"GM: But Gypsy seems to have been done quite a number of times in the past few years - why do you think its all of a sudden become so hot? Angela Lansbury did it and Tyne Daly and Bette Midier did it, and now you're doing it, all in the space of about twenty years.
BP: That's a pretty long time, and it's a great show. The last time on Broadway was over ten years ago, when Tyne did it, maybe twelve years - I'm not sure. It was Arthur's idea to have me do it. Arthur said, "You know, they want to do Gypsy again, and I keep saying no, no, no, no, but I would do it again with you, because you would be a different kind of Rose than the way it's usually cast," except for Angela, who was very different I think than Ethel Merman's. But the reason was that the real Rose was 5'2" and blonde, she wasn't the way it had been played."
http://www.findarticles.com/p/articles/mi_qa4129/is_200301/ai_n9310696 Also there's also this:
"Laurents is the show's librettist and Sondheim wrote the lyrics to the late Jule Styne's high-adrenalin music. It was Laurents who got Peters to participate in a benefit concert for the Gay Men's Health Crisis at Carnegie Hall in 1996 singing "Some People" from "Gypsy." She belted it out like the pro she is, and the idea to revive the show with her as Mama Rose was born. "
http://www.upi.com/inc/view.php?StoryID=20030606-023237-7469r
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