I know people that have gutted MR Kermits to make puppets out of them.
It's not easy to convert into a workable puppet. You basically have to take it completely apart, make your mods, and completely reassemble it.
Inside the cast foam in the body, there is a plastic plate that the wire armatures are screwed to. (See attached photo.) So you have to cut all the wires, and get rid of that plate, and core out the body so your hand and arm can slip inside. Of course you also have to remove the armatures from the arms (and legs if you want to use them - most people don't). And you have to remove the armature wire that goes into the head and is attached to the rubber mouth plate.
The biggest problem is that the fleece the MR Kermit is covered with - while it is a perfect color and texture - is not as hardy as the real Kermit fleece, so it is kind of flimsy, especially since the rubber mouth plate is a bit heavy for a working puppet. Also, the eyes are held on from inside with serious posts and washers which are very difficult to remove, so those rub against the back of your hand unless you can pry them off then dremel them down and re-attach the eyes a different way.
So, in summary, it's not made as a puppet, so it's hard to make it into one. The folks I know who have converted it have admitted to limited success, and it's not so much a functional puppet as it is a Kermit they can slip their hands into and flap the mouth. That, of course, is enough for some people.:lol
Rick