Peach is a dude, Bowser is the ghost of Mario's father, whose real name was Rosebud, and at the end Mario wakes up in bed with Suzanne Pleshette.
In all seriousness. I doubt Rosetta is Peach at all. Peach doesn't have the power to float in a ball of light in space(Looks like the good witch form Wizard of Oz). Also I don't think she's evil. Since Mario isn't really known for plot twists.
It seems to me that she is the reason Mario is in space, and can breathe.