Copyright infringement?
The problem with having him walk around is that he's seen in the Muppet movies and shows as talking in the real world (instead of a cartoon world), so little kids wouldn't get why he's all of a sudden mute (I can't think of how they'd be able to rig it up so that he could talk and interact with people as he does on film...at least with Beaker and Honeydew, they're a machine that is not touched by humans, so humans can't get close enough to have the illusion destroyed).
Personally, I'd love it if they had a giant Rizzo or Pepe out and about.