Well, it might've been this (The NeverEnding Story), or The Goonies, or The Muppet Family Christmas ... but this was definitely one of the firsts. I'm not sure if Jim Henson or Frank Oz had anything to do with it, but the puppetry effects were at least up to their caliber.
I put this on my 'Must See'-list because--though it might be a bit cheesy--it successfully, enjoyably engrains young people with the message: you do have to "keep your feet on the ground" (along with most of your human-interactions), but don't deny the Divine Spark its fuel!