Some insight into this rumor can be read here.
It sounds like Nigel wants her on board, but only as a guest judge, not a full-time judge.
I personally think she's better suited to SYTYCD than she ever was for Idol. Her singing voice was sub-par, her dancing/choreography is great.
I actually wouldn't mind her as a full-time judge, but only if she cans the "gotta be sweet to EVERYONE" schtick and judges critically but honestly.