I have the same opinion about Muppet Show characters pandering to children. That really isn't their function. Weren't the Muppet Babies enough? But it was a savvy move to introduce the Muppet characters to the younger generation, so I don't really mind Swamp Years.
The human actors and the plot were really weak, but to say the puppetry was bad - well I don't agree with that at all. It was up to Muppet standards in my eyes.
Kermit's voice has been about the same for the past decade (when Steve took over) so I don't think his young Kermit voice was much of a shock. It was right on the mark.
Yes, that balloon scene bugged me too. It was like they were trying too hard. I also think there should have been more Muppet cameos. The story had some really boring parts - it would have definitely helped. Bunsen, Beaker, the actual Rowlf, Bean Bunny, Rizzo and several others could have easily been inserted into some scenes. They are all Steve/Bill characters except for Bunsen, but if Dave could dub Waldorf's performance, he could have dubbed Bunsen's cameo.
Just my thoughts. The project seemed forced and empty, but it was good enough for a straight to video project. I've watched it twice and don't think I'll watch it again for a long time. It's definitely not a Muppet Movie. I consider it in the Muppet special category.