soo they like green screened it and had one puppeteer do two puppets and someone lift the hands up?
Back then, no, green screen wasn't around yet. It was shot in front of a 'normal' wall, with the lighting adjusted to give the color effect in the background. On another note, as you said, basically it was shot with somebody doing two puppets at once. Don't know exactly how the arms moved, but they were probably radio controlled. Naturally, this had to be shot several times in order for all the puppets to make it into that one shot. Even on the cover of the OF MUPPETS AND MEN book, we're not seeing an entire row being shot. The final shot of several rows on top of each other required some special post production editing, which probably wasn't as easy to accomplish back then as it is now, but still not too much of a challenge.
As for the remade opening in "The Muppets", somehow i doubt that one performer was doing two characters at once. Rather, it appears that one puppet was shot individually, and all of the arches were edited together in post. You can usually tell when two characters are being performed by one puppeteer, because then the puppets tend to move with exact same actions.