For a person who has always stood up for her beliefs, Rosie O'Donnell
put herself—and her fans—to the test. In March she came out of the closet on national TV and began a campaign for gay adoption rights. In May she walked away from her six-year-old Emmy-winning talk show to spend more time with her family. Two months later she got an edgy haircut, dubbed a "side mullet" by some in the press. But it was not until she pulled the plug on her namesake magazine in September that many began to wonder: Is O'Donnell making some choices she might come to regret? With publisher Gruner+Jahr USA suing her for $100 million over the bitter demise of Rosie (she is countersuing for $125 million), the controversy could put her currency in jeopardy. Remarkably, none of this seems to bother O'Donnell, 40, who is thriving in her free-to-be-me moment. "This has been the happiest year of my life," she says. Much of that joy stems from her five-year relationship with partner Kelli Carpenter, 35, who gave birth to Vivienne Rose O'Donnell—Vivi, for short—on Nov. 29. "It's miraculous," O'Donnell, who was in the delivery room, says of the experience. Being a stay-at-home mom to her older children, Parker, 7, Chelsea, 5, and Blake, 3, is a "great, great, great time," she adds. "People see me at the mall and ask, 'Are you all right?' I am sooo good. I take my kids to school. I paint in my garage, which is like an art studio. I'm loving it." Next up, O'Donnell will produce Taboo with Boy George on Broadway. "Rosie's strong. She always has been," says friend Penny Marshall, who directed her in A League of Their Own. "She has great plans."