I absolutely LOVE the first season of SNL (or "NBC's Saturday Night"). Like the Muppets, I grew up with Aykroyd, Belushi, Chase, Curtin, Morris, Murray, Newman and Radner via the 30-minute "Best of Saturday Night" edits that were broadcast on Nick at Nite, MTV and VH1. None of these 30-minute syndicated shows had the Muppets, however. I first saw them when I bought a previously-viewed copy of the Richard Pryor show on VHS, which was complete.
During the first season, Belushi and co-head writer Michael O'Donoghue were probably the most outspoken regarding the Muppet situation. Belushi was already known around New York as the star of "National Lampoon's Lemmings," a satire of the Woodstock generation (which also featured Chevy Chase and Christopher Guest). O'Donoghue helped shape the National Lampoon magazine, and later created "The National Lampoon Radio Hour" (the on-air talent included Belushi, Chase, Guest, O'Donoghue, Gilda Radner, Richard Belzer and later Bill Murray, among many others).
Both of these guys apparently felt performing with or writing for the Muppets was beneath them. O'Donoghue said "I don't write for felt," and the writers would draw straws or something to see who would end up writing that week's Muppet sketch. Even this grew tiresome, so O'Donoghue gave the duties to the apprentice writers, Al Franken and Tom Davis.
But I do think that among the cast, Gilda and Chevy both had a soft spot for the Muppets. They seemed to be the two most comfortable working alongside them. Chevy appeared with them in the Raquel Welch episode, and then in the Madeline Kahn episode, where, as previously noted, Favog promises him the Beatles if the Muppets can get back on the show.
Personally, I don't mind the "Saturday Night" Muppets. I think it was cool that Lorne Michaels was willing to give Jim a chance. I believe Albert Brooks and Jim Henson were the first two people Lorne contacted to work on the show, even before the cast was hired. I think the Muppets were at their best on the show when they were out of Gorch, and mingling with the various hosts (did the hosts request working with the Muppets, or did someone not turn in a Gorch sketch in time?) I'm thinking of the Anthony Perkins, Raquel Welch, Candice Bergen (Christmas show) and Lily Tomlin episodes in particular. I liked how they broke out of their own world and sort of incorporated themselves into the show.
I believe the last appearance of the Muppets on SNL was on the debut episode of season 2, hosted by Lily Tomlin, in which the Muppets are stuffed in drawers and sing "Whistle a Happy Tune." They even plug the upcoming "Muppet Show" by saying they're not too bummed to be off SNL, because they're going to England to work on a "TV show for children."