I always laugh my head off when this episode comes on. It is a perfect example of what an lovable nutter Kramer is and how funny Mr. Richards can be.
This episode is also a fine example of what makes the writing on Seinfeld stand in a class all it's own. I have always loved how they will have all of the characters doing their thing, and on the surface they don't even seem remotely connected. Of course by the end of the show, it all comes together and in a most hilarious way.
Case in point is how George brings his squirrel to the "Merv Griffin stage" to get some advice from Kramer's "guest" on the "show", the renown animal expert Jim Fowler. Jim Fowler has a falcon on at that moment and it goes after the squirrel. At the same time, Kramer has staged a confrontation with Jerry and his present girlfriend about his "doping her up" to play with her valuable toy collection, which she won't let anyone use.
Of course the star of the show is Kramer. His child-like enthusiasm at finding the "Merv Griffin" set in the dumpster and subsequent delight at running his everyday life as a "Merv Griffin" episode is priceless!
This episode is precisely why I watch. Hilarious!