"Who would you cast in the film......not going on a name, but just on talent?"
I would cast Hathaway, with Hugh Laurie as Higgins, and Maggie Smith as Higgins' mother. I would cast movie stars for a movie. Perhaps if you could surround her with stars, you could get away with LMK as Eliza, but this isn't a Hairspray-type project where you'll have Travolta, Pfeiffer, Efron, Latifah, etc to fill out the cast. LMK's only(?) film credit is Sweeney Todd, and she was unrecognizable for most of it.
Having said all that, if My Fair Lady were to be revived onstage, LMK would be a fine choice. While I'd love to see Hathaway in a stage musical, I don't know that she can sing that score eight times a week. Everyone is speculating about Hathaway's singing abilities (positively and negatively) based on minimal information.
"It does me no injury for my neighbour to say there are 20 gods or no god. It neither picks my pocket, nor breaks my leg."
-- Thomas Jefferson