This is gold.
I was already too old to watch much Sesame Street by the time this aired, but I was getting close enough to the age where I was watching it again for nostalgia purposes. In fact, I think that it might have actually been this incident that got me watching on occassion again.
I am talking about the Death of Mr. Hooper.
I don't recall being terribly affected by it originally. Apparently it only ever aired once - on a Thanksgiving Day in the U.S. to ensure that the most families were home together so that kids could talk to their parents about it after watching, and possibly before (it was well known that what was going to happen on the episode.)
Here is some more info on it.
I recall reading somewhere about the taping of the actual bit. One take (with a multi-camera set-up). That was all anyone could handle, and it was really affecting the first time around. All the tears were real. You can really see the actors trying to hold it together - some more so than others, and those who have the most trouble are actually the most affecting... Bob stands out. David (particularly subtle and good when he talks about the store), Maria (who appears the most affected by the end) and Susan are also really good. Susan barely makes it through "Big Bird, Mr. Hooper's not coming back." and sets the tone. I'm going to make it through this despite how broken up I feel.
It was pretty tear-jerking to watch it now. What a brilliant moment in TV. Although I'm always amused by the theatrical convention of everyone sitting on one side of the table especially on TV when it's used mostly to facilitate a three camera set-up.
It also had the added effect of making me scour YouTube for old Sesame Street bits - mostly Muppet bits, that is of course what I started watching Sesame Street again for in my teens.