The article says the theater was built 1700 under years ago and during the "Roman era." Does that mean it was built after the Second Jewish revolt, after which the Romans expelled most of the Jews from Jerusalem and renamed the city? It doesn't strike me that Second Temple Judaism was much into theaters.
After they tore down the Temple, they re-used the stones.
The Second Revolt, if you mean Bar Kochba’s uprising, took place after the destruction of the Second Temple, so for this to have been built in the Second Temple period would preclude that. The Romans were around for a while.