I don't recall seeing it noted here, but the wiki has both appearances of Blue Bird!
muppet.fandom.com
https://muppet.fandom.com/wiki/Episode_2582
This was a character that I was vaguely aware of (I have a feeling I saw them when they aired but none of the info I see rings a bell), it wasn't until the wiki started getting its trusted sources that I really started to care about seeing them. And they do look awesome.
Too bad they were too expensive to do regularly. I have wondered how they were expensive or if they could have made them cheaper. Then I saw some images, it looks like some scenes have animated/computer animated backgrounds, and looks like they (or at least the first one) were shot on location (but would that be more expensive than, say, all the on-location segments done in season 10?). It's too bad these were parts of street stories as opposed to inserts that were repeated (which could have justified the cost/allowed them to recoup their expenses by airing them more), it looks like they are rather stand-alone from the street plots (the first one is connected to the plot, but I think it could have aired again, maybe if they redid the wrap-arounds).
It's interesting to see that Blue Bird was voiced by a performer who wasn't his performer. I wonder why that was done. It's the only recurring character I know of that Rick Lyon had, and he didn't even provide the voice. I had wondered how it was determined he didn't do the voice, since I'm not familiar with any Rick Lyon voices, but that doesn't mean others aren't (and I think Shane has said that he can tell if a voice is a separate audio track from the performing). Of course if there was any doubt, I read that Lyon confirmed to one fan that somebody else did the voice but wasn't entirely sure - and while not entirely sure, actually thinks it was David L. Smyrl, two years before he became a cast member (and a year before Mr. Handford was introduced).
I wonder if Caroll Spinney should have performed Blue Bird. It would have given him another character, he's clearly based on Big Bird (with the torso of the "Bluebird of Happiness" Big Bird variant), since he's just in Big Bird's imagination it's not like the two characters would cross paths... in fact, it's a wonder they didn't just use the whole bluebird of happiness puppet, without alterations, and have him just be a blue big bird, since the other cast members appeared as alternate but similar characters.