Shrek's entire argument went right out the window when he suggested LuPone for Dolly. While I think LuPone would have probably made a fun Dolly, IF I were trying to build an argument based on age, I would not suggest a similarly aged actress for the role, no mater how good her comic timing may be. To do this negates the entire argument.
The bottom line answer is that stage and screen are two different mediums and one medium is more forgiving to age than the other.
While that is the bottom line answer, I still say Dolly is an ageless role. Ms. Channing has proven that herself. She played the role just as well in her 70's in the 1994 revival and tour as she did in the original production. I do believe that a younger Dolly brings something very different to the table than an older Dolly does, but if played right, both work very well.
To a younger Dolly, before the Parade Passes By means that there is a whole lot of life left that is worth living and it is time to make a change. To an older Dolly it means, "I only have a few good years left, and I should live them to the fullest rather than hiding away and slowly decaying in my solitude." Both interprations work. One is more energized and exciting, where as the other is both poignant and inspirational. It can make perfect sense for an older woman to sing that song.