The 40th anniversary edition of Emmet Otter’s Jug Band Christmas is now available and I found 2 Amazon reviews confirming that the Kermit scenes (and the laundry scene) have been restored:
No word yet if the presentation is original full screen with the proper 60fps framerate or the matted widescreen presentation with the manipulated film-like framerate (the one that aired on ABC Family/Freeform) but I asked one of the reviewers and currently awaiting reply.
UPDATE: So bad news; the 40th AE DVD is in matted-widescreen with the film-like framerate.