From the ArcaMax Publishing, Trivia Newsletter:
http://www.arcamax.com/news/trivia/s-346611-752378
The word "Muppet" itself was said by Henson to have been created by combining the words "marionette" and "puppet"; however, Henson was also known to have stated that it was just something he liked the sound of, and he made up the "marionette/puppet" story while talking to a journalist because it sounded plausible.
This news arrived on: 05/12/2008