As a child, I was terrified of the old man dying -- and his ghost getting up and dancing! -- in the "Gambler" production number in the Kenny Rogers episode. He looked so realistic compared to the other Muppets. Ironically, I saw the episode again recently on Time-Life, and he looks so primitive by later Creature Shop standards. You can see how the back of his shirt is sewn into the seat so Jerry's hand can fit through.
I never noticed this till the most recent viewing, but the Gambler puppet is in the background during the closing curtain call. I suppose that was to make kids feel better -- "See? It was all pretend. He's really fine." Actually, if I had noticed this as a kid, I would have been even more terrified. He died in one number, and he's alive again for the curtain call??
Also, the "Lime in the Coconut" is one of the strangest numbers they've ever done. Those eyes on the doctor freak me out. I saw this on a compilation video first, and only recently learned that this number is from -- you guessed it -- the Kenny Rogers episode. What was up with the Company that week? They were in a really strange mood, it seems.
The whole Alice Cooper episode is just creepy/strange from beginning to end.
For that matter, the African masks in the Harry Belafonte number freaked me out as a kid. (No offense intended -- I'm just saying my reaction to it when I was younger.)
There was another episode with realistic Muppets. The guest star, a female singer (Cleo Laine, maybe?) sings some ballad while the one human Muppet watches the other one die in a field. Then we see its spirit float away. Maybe I misread what was going on in that scene, but that's how it seemed to me as a kid. Does anyone know which episode that was?