This is part of videos created in preparation for the old Henson/Disney deal (which ultimately fell through). It was made as an internal video to show Disney merchandisers how to capture/draw/design the characters for logos, T-shirts, buttons, greeting cards, figurines, TrapperKeepers, coloring books, and whatever else they could/would think of to putting the Muppets on or in. Although Disney didn't use it then, I think Henson did use, share and reference the video with merchandisers themselves.
I do wonder how this video "got out" and on the web, and if anyone has more of it out there. Until I saw this on YouTube I had only ever heard about these videos and saw quick muted clips in montages and tributes to Jim.