Is there anything good about KSY?

[Vic Romano]

In that moment, Kermit was petrified of Jim because Jim was a human. Kermit's knowledge of humans came from what Arnie the Alligator told him earlier in the movie. "Never talk to humans! Animals who talk to humans get killed! And Cooked! And eaten alive!" So his reaction was based on that.

Ah, thanks for clearing that up, I was always puzzled at that part.