@Buttonstc Every word has a history and a first use – someone, somewhere must know how and when and why bijou entered the lexicon to mean theatre. Your guess is lovely, though, but just that.
From Answers.com (but I’m still not completely satisfied):
Word Origins: bijou
from Breton
This word originated in France
It’s a little gem, this pretty gift from the Breton language to English. That’s the present-day meaning of bijou, which was nicely delivered to our language by the French as early as 1668. An English document of that date refers to “Perfumed gloves, fans, and all sorts of delicate bijoux for each lady to take att her pleasure.”
Reflecting our awareness of its foreign charm, we have kept the French pronunciation of bijou (with a zh sound for the middle consonant) and the strikingly French x to mark the plural. To the French, centuries before the English, it was also a charming import. It came from Breton, a Celtic language spoken in the region of northern France appropriately called Brittany.
In Breton, the word biz means “finger.” The related word bizou means “ring for the finger.” By the 1500s the French had learned the word and generalized it to mean any kind of small jewel or gem, as it does in our language today.
English speakers have generalized the word still further. Anything that can be a little gem can have the exotic sparkle of bijou, whether a book, a painting, a farm, or a house. In Ulysses (1922), recently said to be the greatest novel of the twentieth century, James Joyce wrote of “the most prominent pleasure resorts, Margate with mixed bathing and firstrate hydros and spas, Eastbourne, Scarborough, Margate and so on, beautiful Bournemouth, the Channel islands and similar bijou spots.” For a time in the mid-twentieth century, Bijou was a favorite name for an elegant movie theater.
Breton is a member of the Celtic branch of the Indo-European language family, along with Welsh, Scottish, and Irish. Northwestern Europe was once dominated by Celts; the name Britain as well as Brittany attests to the former importance of Celtic languages. Nowadays there are still about 700,000 speakers of Breton, mostly in France.
Aside from place names, only a few words of Breton have made their way into English; the conquering French and English speakers did not have to learn the language of the peoples they subjugated. In the nineteenth century, however, interest in antiquity brought two more Breton gems into English: menhir (1840) and dolmen (1859), both referring to mysterious stone formations raised by humans in prehistoric times. A menhir is a lone tall upright stone, also called a standing stone in Britain; a dolmen is a man-made cavern, a structure of two or more upright stones with a capstone on the top.