I don't see it as the Muppets fudging the lyrics in order to force a kid-friendly image. It's just the Muppets being true to their characters. They've had this kind of absurdist humor from the beginning. This is awesome the way it is.
....The ending was good, a couple sections in the middle area were good....the rest....well, I just wish they had stuck to the lyrics a little more, screw "kid friendly". (I guess that was the aim anyway)