We just finished Season 1 and it's amazing how quickly the show got up to speed. You would think a new show would take a while to get big guest stars, but by Joel Grey (Ep.3) I was familiar with many of the celebrities and their award winning work. My favorite guests were Rita Moreno, Paul Williams, Bruce Forsyth (who I'm completely unfamiliar with), Candice Bergan and Vincent Price. My least favorite is Mummenschanz, whose style doesn't mesh with the Muppets at all.
If I had to pick a moment where things finally came together like magic it would be a sketch in Ep. 10 (Harvey Korman) where Fozzie tries to get Kermit to help him with a joke. Fozzie's part in the show is uneven until then - the sad clown - but after that his role as Kermit's sidekick and best friend is firmly in place. Gonzo still isn't quite there and Piggy's aggression is more uncomfortable today, but Rowlf remains my favorite and I love his musical interludes, sometimes funny and sometimes played straight.