Recently Gremlins director Joe Dante confirmed that he was considering directing the Tom Mankiewicz draft and mentions here that he was thinking of casting John Lithgow as The Joker:
QuoteTom Mankiewicz's Batman sceenplay is one of the greatest unmade superhero movies of all time. The man who gave Superman: The Movie's legendarily difficult early drafts the polish that helped make it the timeless classic that it is (and who also wrote, co-wrote, or re-wrote the screenplays for James Bond adventures like Live and Let Die, Diamonds are Forever, and The Spy Who Loved Me) took a pass at Batman in the early 1980s, and one of the possibilities to direct it was Joe Dante (The Howling, Gremlins, Innerspace...oh, you know who he is!).
Dante passed on the movie, and it took several more years to actually get Batman to the big screen, by which point the project had changed hands so many times that Tom Mankiewicz's script was a thing of the distant past. Sam Hamm's script for Tim Burton's 1989 Batman movie bore no resemblance to Mankiewicz's, which was an extended origin story with similar pacing to the opening hour of Superman: The Movie (complete with a "first night on the job" sequence for Batman), multiple villains (both Joker and Penguin are present), and absurd, Bond-esque set pieces for the climax.
So imagine what that movie would look like had it been directed by Joe Dante. Dante was approached for the director's job, and he was initially interested, but ultimately turned the job down. "It was very outlandish," Dante says of Mankiewicz's Batman script, which he correctly describes as "not Chris Nolan-dark" but "darker than the [1960s Adam West] TV version."
But he did give it a little thought, particularly who he would have wanted to play The Joker. "I wanted to hire John Lithgow for that part because I had met him on The Twilight Zone movie," Dante said. "And for whatever reason, I started to gravitate more towards The Joker than towards Batman. And I actually woke up one night and I said to myself, 'I can't do this movieāI'm more interested in The Joker than I am in Batman, and that's not the way it should be.'" Dante turned the job down shortly after, admitting, "I think I was not the right guy to do the movie."
His John Lithgow comments put the timeline on this right around 1984, perhaps when he was at the peak of his powers with Gremlins, Explorers, Innerspace, and the wonderful The 'Burbs. For your "Lithgow as The Joker" image, keep in mind that he turned in a gloriously bonkers performance as Dr. Emilio Lizardo in The Adventures of Buckaroo Banzai Across the 8th Dimension in 1984.
Dante has no regrets about it, though. "I don't regret not doing Batman, in the sense that I'm not sure what it would have ended up being like. But I certainly can't say it was a major career-booster, my decision not to make it."