My 2 cents on the video/dvd release...
I feel strongly this is something that should be made available and the whole key is in HOW it's done...
If we're talking about an available-in-stores general release product, i doubt that would be the best avenue. It is possible to do so if marketed appropriately and with a special introduction announcing the circumstances the show was done under etc. (ie intro and/or packaging can be along the lines of "In December 2001, Muppet fans the world over gathered in Santa Monica for a weekend celebration of the works of the Jim Henson Company. The official fan festival, put on by Henson and Creation Entertertainment, climaxed with a special live performance of The Muppet Show at the Palace Theatre in Hollywood! The audience got to view the show as if they were watching an actual production of The Muppet Show being taped: seeing the Muppeteers working The Muppets held up over their heads on platformed stages - while interacting with human guests Paul Williams, Brooke Shields, and Jon Voight. Mixed with classic clips, favorite songs/sketches and all new material, this special evening doubled as a benefit for Save the Children. Now fans the world over can experience the MuppetFest magic that took place!" Extras of course could include additional footage of highlights of the Festival portion....or even some of the rare footage that was screened (or stuff that wasn't shown...like some of the stuff being shown at MTR - this would be a wonderful opportunity to get some of the old commercials and rare early stuff on DVD).
...However, while that would be the best route to go IF it was a commercial DVD, my main feeling is that it should be a special video/DVD sold through Creation...which is something that's not too uncommon for them to do - releasing videos of a festival highlights. (The Farscape Fan Club had a video release of their first Con). That way it's available to those that want it - the purchasers have a full understanding of the circumstances that the show was done under, and much of the overhead costs associated with a larger commercial release wouldn't apply as per fancy packaging, advertising/marketing, distribution, etc etc.
Granted, Henson can probably use all the money it can take in (and Creation certainly love to rake in as much cash as they can bleed from fans), but if possible, they could even extend the charity portion further and have a portion of the proceeds go to Save the Children.
There are ways to get this show out to those who want to see it! Especially considering how the initial press for MuppetFest referred to it as what would be an annual event and now it doesn't seem like there will be a MF II (or if there is, it won't be for awhile), it would be a good way to keep the official organized fandom going and keep up the energy/momentum. Those that weren't able to attend (and especially those who were counting on a future event - not to mention those that were initially planning to go but weren't after the delayed date change) should be given the chance to see it. It can - and should - be done.