What, exactly, does the city require a permit for? I'd want to see the written policy.
I think most places get around that by not making it a parade or a race. After all, there is no registration, no t-shirt, no fee; if people decide to make a caravan and drive to the same place together, they don't need separate insurance. Bicycles as vehicles don't, either.
Now, if an edict has already been laid down and doing it anyway would be in defiance of that, I don't think I'd do it 'cause the point of the ride is to *get* respect, not build barriers. However, I would be sniffing around to see if somebody sitting behind a different desk would have a different perspective. And... I'd be looking well in advance for the donations.
About publicity: around here, email is turning out to be the most effective wayof getting people out for things. Of the 62 people at our Urbana Master Bicycle Plan meeting, 30 of them were there because of emails. Flyers, etc. had reached little groups of 7 or 8. I think it went the same way here... and Iwas kicking myself for *not* making sure I got to the bike racing email list because they had not gotten the word (one of 'em joined us halfway through coming back from a training ride). However, we're a college town and it seems the active people are active online.
A cheap way of spreading the word is putting up posters in bike shop and gym windows, too.