I actually once wrote a paper about gender in Labyrinth. The effect this casting in a remake would have on that reading is really interesting to think about.
Well, when I wrote the paper (and I’m working off memories from some five years ago, mind) my assertion was that Labyrinth was the story of a young woman coming-of-age through understanding her relationship with the male Other.
Almost every creature in the labyrinth that Sarah talks to is male. She has difficulty understanding them, but she must do so to move on to the next stage. The only exception is the garbage lady, who represents what Sarah could become if she doesn’t navigate her coming-of-age properly.
If the labyrinth is the masculine world as set piece, Jareth is masculinity, as seen by a teenage girl, embodied in a single person. He’s alluring, he’s dangerous, and he has all the power. The offer Jareth makes in the final confrontation, “Fear me. Love me. Do as I say, and I will be your slave,” is the offer the patriarchy claims to make to women. Sarah wins when she realizes that she doesn’t have to submit to that. As soon as “You have no power over me” stops being a line she can’t remember and starts being a reality in her head, she’s ready to move on to the next stage of her life. The test of the labyrinth is over.
Sarah facing off with a female Jareth, even an androgynous one, would be a very different movie.