I have an idea for a hula hoop that contains the basics of Peggy but in a string that you can wrap around inside a hula hoop. Would you care to give me some input on this ?

There are a couple of LED hula hoops over on instructables.com that you might want to take a look at to get some idea of how others have put batteries, etc. inside. I didn't (on first glance) see any that used microcontrollers, but it ought to be feasible.