This show could easily be on DVD!

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Another possibility: the problematic clips could be replaced with new footage created for this purpose, perhaps in the form of realistic-looking CGI to make a clear distinction from the Muppet Babies' cartoon world. Such new footage, as long as it had a certain level of difference from the clips, would be ok under the "parody clause." A precedent for such a strategy is the opening scene of the film Not Another Teen Movie: the filmmakers didn't have the right to show a clip from She's All That so they filmed their own spoof of the clip they wanted and used it as a substitute. Most of the MB storylines, if I recall rightly as my memories from 25 years ago are quite hazy, didn't depend on specific lines or people in the stock footage: the context only demanded "soldiers marching" or "spaceships flying" to make the gag work, and there are plenty of public domain images and easily whip-uppable new footage that could fill the bill. For situations that are more complex (e.g., clips edited so the real person and the cartoon seem to be having a real conversation), the editors could use their imaginations to come up with something new that syncs up with the existing cartoon side of the dialogue.

True, Disney owns all that and we are probably CLOSER now than we ever were to getting this on DVD, but there's still the references to DC(DC Comic characters like Superman) and Universal(Universal movie monsters). Other than that, I think all the other footage(stock footage) is public domain.