Why not? The song was released in Music, Mayhem, and More! in 2002. I think it would be fine.
And it was on the Muppets Wizard of Oz soundtrack (one of many non-Oz songs to have also been released on Music, Mayhem, and More!).
As far as covers with new photos vs. old photos goes, I'd be okay with existing photos only if all the material is recordings from previous productions, but I want a new cover image if it's all-new recordings (though I really don't like their current outfits, thankful they wore their original clothes in the new movie but puzzled they wore their new clothes in the publicity photos).
I wonder if it'd sound jarring if they rerecorded existing Electric Mayhem songs with the current performers. Would it sound odd to hear "Can You Picture That?" or "Barnyard Boogie" with Barretta, Jacobson, Vogel, and Rudman voicing the characters (if "Barnyard Boogie" were rerecorded would they rerecord Lips' line or just have another character sing his line?)?
If not a new album I'd like to see an Electric Mayhem TV special, maybe a "Behind the Music" parody or the band in concert (perhaps similar to The Fantastic Miss Piggy Show).