This is done quite a bit in TMM actually. "Movin Right Along" is used so much that it's a wonder that it didn't become more recognizable over the years than "The Rainbow Connection" due to its' suggestive presence. "I Hope That Somethin Better Comes Along" is peppered here and there and so is "The Rainbow Connection" on occasion. The score has some stand alone material, but I think you'll find that it's mostly comprised of song material orchestrated differently.
I've been very pleased with the way Peter Lurye and Co. have handled their music for Bear in the Big Blue House. In addition to the fact that the songs are fantastic, their musical ideas have been spread all over the jazzy scores for each episode sometimes even predating the appearance of a particular song providing foreshadowing for a later event that a child wouldn't pick up on consciously, but would benefit from ultimately.
One of the more fun scores is Joe Raposo's for GMC which heavily influenced Tony Geiss's Don't Eat the Pictures six year later.