what they should've done...
...is kept it in the Muppet Show format.
what made the Muppets great is that the guest stars entered the Muppet world, not have them enter the world of the guest. They interacted with the Muppets and the show was centered around them.
I know this was a way to introduce the Muppets to a new generation, but it just didn't work. The only thing that reminded me of the old Muppet Show was Ashley's number with Kermit and Miss Piggy. It's exactly the way they would've done the skit on the Muppet Show. The rest was just crap.
Miley's song was ok, but her interaction with Animal wasn't believable. Animal's lovable, but he's a complete psycho - he would've attacked Miley (in a good way) and it would've been fun to hear him yell, "MILEY! MILEY! MILEY!"