I smile as I hear the noise from the front of the restaurant.

Elaine Constance Smith has arrived, her entrance slightly late and, as always, as grand as the MGM. And with the big hellos, hugs and kisses to staff finished (she knows everybody), the actor sashays over, removes a pink designer silk coat and reveals a surprise; not that the coat was in fact bought in a Primrose Hill sale for £68 (or that she was staying with her friend, the Channel 4 journalist Jon Snow, at the time) but here before me is Smith Lite. She's lost two-and-a-half stones.

"I just got fed up being fat," she offers. "I used to eat because I needed a reward. I was an emotional eater. Always needy. And being rebellious, I rejected the health notions. But I watched Oprah one day and realised why I was reaching for the Maltesers. Now I go to zumba and eat carefully. And it works."

She looks great at 54. If Rab C Nesbitt returns for another series, Mary Doll will have to pad up. However, the personality is still extra-large.

Just 30 seconds into the chat, Smith claims this is the first time she's ever appeared in an in-depth Herald feature, claiming she's previously been seen as "too low-brow". Regardless, the lady is indeed Scotland's showbusiness grande dame – her make-up is now done professionally for photo shoots – and has put more bums on seats than a battalion of usherettes.

"It's bloody ridiculous," she says of the perceived slight. "Snooty arts editors with their heads up their cultural arses."

Smith's boldness is refreshing. The great gob in full flow often gets her into trouble (the last time we met she revealed she hadn't gone to see my own theatre play because she'd heard it was misogynistic), but no-one could ever accuse Smith of circumspection.

However, today's chat could perhaps present a challenge to the free-flowing voice. Smith is set to resume her national tour starring in I Dreamed A Dream, the musical based on the life of Britain's Got Talent winner Susan Boyle. And who wouldn't want to front the greatest showbusiness story of the decade – 47 year-old woman with learning difficulties takes five buses to a TV talent show audition, a week later has 15 million hits on YouTube, goes on to sell more albums than Beyonce and bank £25 million?

But here's another story. While I was interviewing a concerned friend of Boyle in her hometown of Blackburn, just as fame broke, they revealed how a younger Susan once entered a miners club talent competition wearing a "gorgeous, long, red silk dress". And she won it. However, while taking her bow, the singer shocked the audience by lifting the dress above her head to show a pair of big pants to the world.

The point? Susan Boyle is a complicated, vulnerable individual. Had she been Smith's sister, would the actor have been accepting of the idea of someone playing her? "When I was asked if I wanted to do it I said, 'No, I don't want to play Susan Boyle,'" says Smith, emphatically.

So why the volte-face? Smith rewinds to when Boyle first became famous. "She mentioned she'd like to see Elaine C Smith play her in any movie. I laughed off the idea. I said no, it will become a Hollywood movie starring Michelle Pfeiffer who'll put on a fat suit and a bad Irish accent and get an Oscar – because Hollywood rewards people who play 'ugly'. And Scots actors just don't get those offers.

"Then Susan saw me on the Paul O'Grady Show, saying I was impersonating her in panto. And she thought the skit was really funny. From there, I got speaking to theatre producer Michael Harrison [who produces Smith's Aberdeen pantos] and he suggested we do the stage show. I still wasn't convinced but my two sisters, Diane and Louise, were pushing me to do it, saying Susan was such a great character to play."

Serendipity intervened. Publishers Random House rang Smith to say Boyle was stuck in Los Angeles and was due to be in Edinburgh to record her audio book. Could she stand in for her? "So I found myself reading her life story before it was published. And I became her voice. But what I found was I began to inhabit her character. You see, half of the story was my own life, brought up in a mining village [Newarthill in Lanarkshire], 20 miles away from her, a Catholic Irish singing tradition, all of that."

Smith became excited by the idea of the stage show. "I said to Michael: 'Wouldn't it be amazing if we did a big opening night show for charity, and Susan came on at the end?'" Meanwhile, Boyle's management recognised they had a singer who couldn't do a full concert but agreed to the nightly cameo role in the theatre show.

The deal done, Boyle herself had to agree. Smith called her up and suggested a cup of tea to talk things over.

"She was really nervous when I called. I think I calmed her a bit by pointing out she'd handled all the pressures really well. And we agreed to meet and I said, 'Where should I come to?' When Susan said she had two houses I said I wanted to come to the posh one, just so I could have a nosey. And she laughed. And I said I wanted a Marks & Spencer biscuit as well and she chortled away.

"Turns out she brought the family to meet me and she had this beautiful piano, which I played a bit, and sang Leaving On A Jet Plane. Susan was too shy to sing with me. But we got on like a house on fire – especially when I told dirty jokes because she's got a real raucous sense of humour. As I left she put her arms around me and said, 'Elaine, I'd be honoured if you would play me on stage.'"

Alan McHugh was brought in to write the script, and it read well, "but needed magic", says Smith. "The night of Susan's 50th birthday party, with Stavros Flatley entertaining, I came home, went to bed and about half three in the morning woke up with an idea for the start of the stage show.

"I had this thought of recreating the Billy Bigelow moment in Carousel, looking down on his life. You see, I reckoned Susan should have a voice. Everyone else had been talking for Subo but I wanted to let her speak. So I sent the opener to Michael Harrison and he said I should work with Alan on the show."

Smith drew upon every theatre experience she'd had over the years, from Wildcat to 7:84, from Shirley Valentine and Little Voice. She played every emotional card possible. And 15 drafts later the show was formed.

"People thought is would be sing-along-a-Susan. But it's not. It's a real story, with music." Smith narrates the story of Boyle's life, with flashes forward to the present. It reveals how she almost died as a child after she was starved of oxygen. Her parents asked the doctor if she'd live. "I wouldn't expect too much," he replied.

"The Susan I create is a blend of me and her and other women I've known. But she's brighter than everyone says she is. She likes to laugh. I let the audience see that side of her. And her innocence. For example, there's never been in a grown-up romance in her life, but we show her first love interest in John, a school pal. Susan's speech is really poignant: 'A boyfriend. I had a bloody boyfriend. Someone who fancied me. And it wasn't a dream. It was real life. And for the first time in my life I felt normal.'"

The play talks about the bullying, about how Boyle lost her father and her sister, and stayed at home with her mother. "When her mum died, Susan told me, she didn't know how to pay a bill. I think she was severely depressed and didn't tell her family. And with the death came the memory of the bullying, plus the weight of learning difficulties."

The play reveals how after Britain's Got Talent, Boyle begins to lose control. But there have been reports that during the run of the musical, Boyle's grip on self-control has slackened again. To the point of the dress-lifting incident? "There has been a couple of nights in the show she's almost done that," says Smith, softly.

But wasn't that always going to be the problem? Wasn't this the reason Smith said she didn't want to play Boyle in the first place, because she recognised fame's spotlight could burn her?

"Her management thought it would be a great experience for her to come into a theatre, watch how a performance is put together, see how an experienced performer could handle an occasion. They figured she would observe and absorb, and perhaps be able to take on the responsibility of a major appearance."

The hope was that by seeing her life played out on the stage, Boyle would gain more self-awareness, more confidence.

"At first she loved the trips to London, the limos, the hotels. She loved watching the show develop."

Then came the first dress rehearsal in Newcastle. "We realised she likes the part of the play building up to the Britain's Got Talent audition, where I'm in gold [audition] dress and grey wig, because it's a laugh for her. But when I walked out in the black wig and dress, as she looks now, she freaked out. 'Oh, I dinnae like that. It's too like me.'

"That first night when I came off at the interval she was red-faced and in tears. She didn't come out of her dressing room for six hours. And she was to come on stage that night. She wouldn't speak to Michael. And when she finally came out she threw me such a look.

"I guess a whole myriad of things were going on in her head. Perhaps as a performer she'd dreamed of being on a stage like this. But then the dream became a reality – like the line in the song: 'For life has killed the dream I dream.'

"Perhaps seeing the death of her father played out, the enormity of it all, she couldn't handle it. Regardless, I was really upset for her, and everyone else was upset for me. And I had just lost my own dad so I could understand the feelings she had.

"But on top of that she had to deal with the headlines such as 'Hairy angel', or the picture of her belly with the headline 'Britain's gut talent' – and one woman writer even wrote a caption around a picture of her foot in her sandals and the need for a pedicure."

During the tour there was an incident in a service station, which was filmed and put on YouTube, but Boyle's management company Syco had it removed in two hours, protecting the star.

"Anyway, we opened on the Tuesday and Susan apologised. Later, her family were in the dressing room crying, but they loved the show and that helped Susan. Meanwhile, I had to focus on telling the story."

Boyle appeared on stage for between one quarter and one third of the performances. Some disappointed audiences asked for their money back when it was known the singer was off the bill.

"It was hard," Smith says of negotiating the situation. "If we didn't put up signs saying she wouldn't be appearing then I'd have to go on at half time and make a speech. And if we did put up signs then I'd get a cold look from Susan."

It's certain Smith, who's very close to Boyle, wouldn't have carried on with the project had the singer's condition not improved. She won't explain, but you'd guess some treatment has taken place, or perhaps Boyle can now place her new world in perspective. But what of Smith? Has the Subo experience made her appreciate her own lot?

"I'd already come to realise what I have is wonderful," she says in upbeat voice. "When I was younger I wanted the cars, the houses, the fame. I needed it. But then I lost my mum, my dad, experienced a lot of grief. Hence the weight gain. But I've come to live by Shirley MacLaine's edict that says: 'Dance while you can.'"

Smith has a stake in the show (a critical hit that's being compared to Blood Brothers) but it's been massively expensive to produce, and will need to run for some time to cover its cost. "I haven't taken anything, other than weekly expenses," says the actor. But that could change. There's an Australian tour being lined up for four months next year, and Cameron Mackintosh is interested in taking the show into the West End. Word is the Canadians aren't so keen, unless Subo is on stage, but the show could well play on Broadway.

Smith points out that Boyle may still sing in Scotland. "She said to me last week, 'Can I still come to Glasgow?' I said, 'Of course you can. Just turn up and sing. But let us know.' And I can't imagine she won't want to take the stage in Glasgow or Edinburgh. I hope she does. When she does go on it's like the Pope appearing."

The Susan Boyle movie "may yet happen". Meanwhile, the sluice gates on the Smith voice open completely again as she reveals her own production company has made a new documentary, Searching For Subo, to be shown on STV.

"We went to BBC Scotland and offered them this film of the stage show experience. Unbelievably, they passed on it because we couldn't guarantee access to Susan. But STV snapped it up. They reckoned it was a no-brainer."

She adds, "What I've learned in life is that if I sat waiting for BBC Scotland to offer me a show, or the National Theatre of Scotland to give me an audition, I'd be an old wummin. Forget it. You've got to make things happen yourself. And that's exactly what I'm doing."

Does that mean she'll be making a Mary Doll exercise video? "It could well happen," she says, grinning. "Wait and see." n

I Dreamed A Dream is at Festival Theatre, Edinburgh, September 21-29, and the King's Theatre, Glasgow, October 1-13.