In the muppets there is no line between the biological and the puppets. Kermit isn't a puppet frog, he's a real frog that happens to talk. Walter is a real person, he just happens to be really short. So it's perfectly normal for a real human to have a muppet relative. As for muppets dating humans, that's hard to say. On one hand if piggy dated a human it's still a pig dating a person, but whose to say what would happen in real life if all of a sudden he had humanoid talking intelligent animals? Maybe we'd all date a pog or a frog.