Why was it such a misfit?
It's an odd one. Technically it's a Muppet special, but it doesn't have any of the trademark Muppet humor or whimsy.....almost as if it was written and made by completely different people. Which it most likely was.

Kermit the Frog appears at the beginning and end, and so does Mr. Willoughby--and nowhere else. Sure, the special's named after him, but he doesn't grace us with much of his presence. From what little we see, we gather Mr. Willoughby is some flamboyant millionaire who likes to use long words that don't mean anything. "This shall be the most frabjabtudjlinous party ever! I want the most grapsnarblidlougeous tree you can find!" He sends some men out for that tree, and from here the special is all about a family of mice.

The mice are also out looking for a tree, and the boy mouse picks the hugest one he can find. The father mouse points out that there's no way they can possibly carry something like that home. But someone else can....while they're in the tree, it's sawed down and carried to Mr. Willoughby's.

They find it's too tall, so they saw off the top part and throw it out. The mice were fortunately in the top part, but the tree is still too big for them. A family of bears sees the tree sticking out of the trash, carries it home, but then they find it's too big for their cave, so THEY take the top goes on and on like this, with increasingly smaller animal families, until the tree is finally mouse-sized. Yay, everyone has a tree and everyone's happy.

The final two minutes are of Willoughby's actual Christmas party. False advertising with that title....

Why didn't it fit in?
It's got the "only ran once" thing going against it. There's also the fact that of all the Muppet specials I've seen, this one's the most boring. You lose, Mr. Willoughby.