Thoughts
The most important fact about the special which has not yet been emphasized enough is that it aired on Monday morning as a regular episode of Sesame Street in the regular time slot. (WGBH again refrained from having a voiceover during "Mahna Mahna" on this occasion.) Presumably it will be shown again in the future in the regular rotation of episodes. Therefore, it had to be written in such a way that it could stand as an ordinary episode while also serving as a nostalgic prime-time special. I don't think that it could have accomplished these two simultaneous goals any better than it did. Indeed, the cleverness shown in writing it with those goals in mind places it, not among my ten favorite episodes, but certainly among my 35 favorite episodes of all time.
As others have pointed out, the entire purpose of the regular segments such as "Journey to Ernie" is to give children in this frazzled, fearful world a comforting sense of familiarity and predictability. Since "The Street We Live On" was to air as a regular episode, the inclusion of these segments was absolutely necessary, no matter what adult fans might think. Indeed, I was surprised the special departed from the usual format as much as it did by having the Letter and Number of the Day, "Journey to Ernie" and "Global Grover" interwoven with "Elmo's World" rather than being separate entities. Whatever one thinks of Elmo, this allowed the episode to flow better as a special.
The Mr. Noodle, Question for You, Ask a Baby, Drawer and TV segments within "Elmo's World" were all used to celebrate Sesame Street in ways small children would understand, such as the discussions of how Cookie Monster would eat a cookie. And I suspect that the TV cartoon segment may have been a highlight of the special for casual adult viewers who would find it weird and trippy to see the familiar Muppet characters as cartoons rather than Muppets.
Many fans have expressed a wish that Mr. Hooper had made a longer appearance. Given that this show had to be watched and enjoyed by three-year-olds, how could this have been accomplished? If Grover and Elmo had stayed in that timezone much longer, Elmo would have inevitably asked where Mr. Hooper was now, and Grover would have had to tell him he was dead. Death is a big concept that cannot be casually mentioned in a show for children of that age. (The reference in the final montage to Mr. Hooper "not coming back", out of context as it was, would have sailed right over young children's heads.) Elmo's visibility in the wedding scene was regrettable, but as a Doctor Who fan, I know that continuity errors are inevitable in an anniversary special for a long-running series, especially when the plot involves time travel.
The time travel sequence could, of course, have been extended in scope to include events that Elmo actually remembered. This would have avoided the continuity error and allowed the inclusion of further big events like the revelation of Snuffy's existence, Slimy's trip to the Moon, the hurricane and the (post-9/11) firehouse visit, all of which were shown only in brief clips in the final montage (but those clips had sound). But this might have left insufficient time for the regular segments which, as I have explained, had to be included. (Indeed, the special had no opening title sequence, perhaps also for timing reasons.)
As for the suggestions that a number other than 10 should have sponsored the special, all I can say is that I was overjoyed to see the "Song of 10" with the baker and the "10 tiny turtles on the telephone" again. And the operatic version of "C is for Cookie" with Marilyn Horne, which I had never seen before, is surely one of the best Sesame Street segments ever. (But I was underwhelmed by the song about counting 10 flowers by twos -- am I right in suspecting that it dates from after the passings of Raposo and Moss? Also, I distinctly recall seeing the "10 bells" section of the "Song of 10" in the early 80's -- if it was edited into the segment after the fact, this was done before then.)
I have only one serious criticism of the special. I was a big fan of the late actress Lynne Thigpen, who starred on the "Carmen Sandiego" series as the Chief and appeared on CBS' "The District" as Ella Farmer. She also appeared on Sesame Street in the "Slimy to the Moon" storyline as the head of Mission Control. I missed all the episodes of that storyline because I was busy with school, and I very much wish that the final montage in the special had included a clip of Lynne Thigpen rather than the clip of Tony Bennett singing about Slimy. But other than this, I was extremely pleased with "The Street We Live On". And we did get to see Mr. Hooper, David, and both Ernie and Kermit played by Jim Henson.
And even though I love Elmo, my jaw dropped open with surprise and pleasure when Oscar called him "the little red menace"! How many TV shows are that responsive to their fans?