First off, thank you Comedy Central for finally showing the rest of season 3. I had to wait almost a year for the conclusion of "Lost in Parking Space"... all I want for Christmas is for this show to NOT get canceled anytime soon!
Doing a parody of The Muppet Babies with the housemates was truly a stroke of genius. Even from the opening credits I knew I was going to love this--because not only was every baby housemate incredibly adorable, but they were the complete opposite of their adult selves! As the episode progresses we see what happens to each housemate to give them their most apparent personality quirk (Clara's racism, Xandir's homosexuality, Ling-Ling's language, Toot's weight & self-mutilation, Hero's sex obsession, Wooldoor's bizarre looks, Foxxy's sluttish ways, Spanky's nudity & love of excrement, etc.) These quirks are pointed out by a narrator--a parody in itself having a seemingly refined old English gentleman saying homo and "whore"... very funny.
Immediately Hero steals the show as the tattletale momma's boy and when the b*tchy neglectful babysitter arrives, the situation escalates out of control. Though it's obviously not meant to be canon (they're brothers and sisters here but as adults they're not related and didn't know each other before becoming housemates) it is still an extremely funny parody and a fresh take on the crazy DT atmosphere.
The voice acting and animation were especially good in this episode, it is definitely the best of season 3 so far and one of my favorite episodes of the series overall. A+!