I don;t know, but I can guess.
My guess is that at that time, the Muppets were still very much into developing characters to particular performers. Many of those Season 1 characters that were more or less dropped were Eren Ozkar's. She left the show. So they developed a new bunch of characters more characteristic of her replacement. (who incidentally, had performed Mildred, and , Zelda as part of her TMS audition). - hence the introduction very early on in Season II of Lou-The-Jugband-Lady, and later on of course Annie Sue.