The idea of Snuffy always being missed was a bit frustrating, but when you think about it, the whole scenario was so far fetched, it had to be funny. This huge, unique looking creature roams the street and no adult happens to see him. He was often right with the adults and it was just a matter of their turning their heads, which of course they would never do at the right time. It's also funny that they would have trouble believing that such a creature exists when they see an eight foot bird, a furry green grouch, monsters, and other strange looking "humans" everyday.
Yes, the main reason they decided to let Snuffy be seen was due to the child abuse issue. However, they also said that just about every scenario of Snuffy being missed had been done and the running gag was getting old anyway.
I would like more information on how many muppets actually saw Snuffy during his "hidden" days. It seemed like the writers could not quite make up their minds as to whether the other muppets would fall into the category of "adults" who don't see him or "children" who do.
Take care