Yup, i think Jamies right about the licensing - thats what i remember too. I think a Muppet Babies playset would be a huge mistake - sure it'd be popular with a small group of Muppet fans but it'd probably flop in the stores. Same thing with the Koozebane if that was a playset, and maybe Bear On Patrol. There are plenty better things to do that might have mainstream appeal - backstage, theatre, Vets hospital, maybe even things like EM Bus and Happiness Hotel. They don't really have that many spots left to fill if the line ends when the license runs out in 05 !
A Muppet Babies PVC Set - that might not be bad, although i still would think fans of the show have already seen enough of them already - sure Palisades could do them better and they'd be movie versions but not sure if you could get enough people to part with $20 for a set.