I always heard that Larry McMurtry saw Heath in Monster's Ball and said, "That's Ennis!" and from then it was a done deal. I never heard about them ever considering another actor for the role.
And I also think the "we waited until Heath Ledger got big enough so we could cast him," is a bit of hyperbole. Big enough how? Big enough star? Big enough in height? Everything I have read seemed to indicate that it took years for all the pieces for the movie to finally come together. Supposedly, he and Ossana optioned the movie very soon after she read it in the New Yorker (which was soon after it came out, 1997). They also wrote the first draft of the screenplay very quickly. But it took took 7 long years of this, that, and the other thing before they finally got to the point of filming and actually having a movie.
My 2 cents.
L
The part of this that I remember hearing (and I think it was Diana Ossana herself who said it at the Aero) is that she was staying at Larry's house, went to bed that evening with the current (October 1997) issue of the New Yorker, and was waiting for him when he woke up to make him read the BBM short story. He didn't want to read it at first, because he doesn't read much short fiction, but she insisted, so he did, and right then and there, they called Annie Proulx on the phone and asked her for the film rights.
That's how I remember hearing it. If that's true, Heath was 18 1/2 at the time, and had only played the part of Snowy Bowles in "Sweat," which I think only showed on Australian TV. It wasn't til March 1999 that Ten Things I Hate About You came out and Diana and Larry could have conceivably heard of him (and probably wouldn't have wanted him yet, based on the part in the film).
Monster's Ball came out in February 2002, when Heath was almost 23. So my guess is that Diana and Larry had the movie for at least 4 1/2 years before they knew Heath was the one for them. But at that point I would believe he was the One and Only.
(All dates courtesy IMDb)