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From my memory it went something like this (from various interviews and Foley's books):
Terry Funk and Foley were in the ring coming up with ideas for the match on the Saturday at the arena. Funk told Foley he had to come up with something huge to top the awesome HBK-Taker HIAC from the previous October. He then suggested starting the match on top of the cage, and (perhaps jokingly) suggested taking a bump off the top. Foley, I believe, shot it down but later started seriously considering it.
The next day he told the Taker, who refused to do it. With Foley nagging him, he must have eventually agreed to it.
Who really knows about the second bump, it does seem unneccesarily dangerous and uncontrollable, but also that panel gave way far too easily.
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