DUUUUDE!
When I was about 8, my dad had borrowed a video with this on it. I caught about 2 seconds of it before my folks cut it off when I ran into the living room one night, and I've been trying to find out what it was just about ever since!!!
Excellent Find.
For those of you not in the know - Rainbow was a kids show in england that ran for many years, and was pretty much as depicted minus the obvious sexual connotations - this is like a well made rip on Sesame Street for those that remember the original.