Thanks for posting this. It reminds of an interview with Henson that I saw where he says that one of his favorite bits is Kermit tap-dancing, because it's such a mixture of performance and sparking the viewer's imagination.
 

I was actually looking for a clip of Kermit dancing to "Happy Feet" when I found this one, now that you mention it. But I didn't know that it was one of Henson's favorites. It doesn't surprise me, though, it's definitely one of mine!