If I remember correctly, Bennett wanted to make a movie about dancers auditioning for a movie version of A CHORUS LINE. I sort of get why the studio wasn't thrilled with that idea, which is really a completely different project than a film adaptation of A CHORUS LINE, which is, obviously, what they wanted. It all sounds a bit meta and I feel like Bennett's concept would have been better served by creating an entirely new movie musical about dancers auditioning for a movie musical adaptation of a Broadway hit that would have been informed by Bennett's experiences working on the actual ACL film.
Thinking about it...I'm not sure how Bennett ever saw this working. The songs in ACL come out of those characters' very specific experiences and I can't figure out how he was thinking of presenting them in his concept. Would you have a dancer auditioning for Mike singing "I Can Do That" as though it was his own experience? Would we have seen multiple versions of each song as different dancers audition? It just doesn't seem workable to me.