You make a compelling argument, but I remain skeptical.
There's valid reason for skepticism, because how convincing it was would've depended on the quality of the effects. With enough skill and budget, it could've been fantastic; if they'd picked a cheaper or less qualified FX company, it could've looked fake. Compare the first two Ninja Turtles
movies with their strikingly convincing Henson-made animatronics to the third movie with its cheaper, faker-looking non-Henson turtle suits. (Or the Next Mutation
live-action TV series where you could clearly see the "hidden" eye holes and neck seams on the Turtles' heads.)
Or with a movie they could go all CGI. Hell, if they can make Optimus Prime look real, they can make Gargies look real.
Today, yes. But we're talking about whether it would've been feasible to do a live-action movie back in the '90s.
Although what I said about the quality depending on the skill of the execution is just as true of CGI as it is of animatronics, if not more so. With enough talent, time, and money, CGI can look incredibly real, but otherwise it can look quite unconvincing.