I think Rita Moreno and Morgan Freeman smoked some devil weed before they did that dance.
I heard a story on NPR about this Sesame Street DVD and the warning. They talked about how "raw" Sesame Street was back then, and the sense that you were in the "mean streets" of the city. I was left kind of

They also insinuated that perhaps Bert and Ernie had a "special" relationship, and that Oscar needed Prozac.
I think if anything, it shows how over-protective we've become as a society. Now we have to worry if Tinky Winky holds a purse. Puff the Magic Dragon and Alice and Wonderland would not be released in today's society.
I'm glad we think about the "lessons" we teach our children. I'm not so glad that the same programming I watched as a child would be considered so outrageous by today's standards. I think we've definately gone too far.