well when looking for images of angler fish I found that someone already had this idea!!!!  On Muppet Wiki it says Elmo appeared as an angler fish in the episode Fish of Elmo's world.  Here's the pic.  (Am I allowed to post a pic I found on the net ?)
Boohoo...back to the drawing board! PS Will someone let me know if adding this picture is ok.  If not I will delete it.

Nice!

(Am I allowed to post a pic I found on the net ?)

In this case I am sure that it is ok what you have done.  You posted the image to help people understand what your where talking about.  It really wound not be much different then if you printed the image off on your local printer and showed it to your friends to so they understood what you where talking about.

[Boohoo...back to the drawing board!

You have a great idea for an angler fish character.  Don't let the fact that someone else has had a similar idea deter you from creating your own angler fish puppet.  What you want to do with your character is not be another Elmo Angler Fish anyway.  Design your character and build your puppet.  I for one want to see your idea come to life.