I think the puppets are just as realistic as the CGI. I think the most beneficial thing is the actors have something "real" to interact with....not some guy in a blue suit or some wacky getup like what Ahmed Best had to wear.

Looking at Farscape, Zhann and D'Argo were just awesome looking for actors in makeup and prosthetics. Mix that kind of craftmanship with some CGI to spice certain things up and it would have looked spectacular and the actors would have loved it since they could see some of what was going to be onscreen.