Hijinks ensue when they find a magic lamp.
I think the fact that the genie is a rabbit is supposed to be a joke ala Bugs Bunny: "Come here, Jeanie, my light brown hare!" But in this case she's more gray than brown, so it kind of dilutes the joke, if such a joke was indeed intended.
How come Ernie's robe, or whatever it is, doesn't turn into a rubber duckie when he grabs its hem? And what would happen if he picked up his own Rubber Duckie?