Some mermaids in an old black-and-white WWII Warner Bros cartoon had tits (USA Night Flight represent, yo), though they were pixilated out for broadcast.
I think the best version is actually the Faerie Tale Theater version made by Shelley Duvall. It was the only adaptation totally true to the source material.
Russian animation is the best. If anyone knows of a '60s era stop motion animation that is basically the side view of a sleigh going through LSD land, please let me know. I saw it on PBS once and was mesmerized.
Nope, not that. The one I saw didn't really have a plot, it was like cardboard cutouts (very detailed and decorative though) of a sleigh with some people in it. It was only a couple minutes and didn't really have a plot. If I ever find it I'll post it.
Okay this was amazing and wonderful all over. I love the little technical touches, like the shading on the ships and the overall children's book illustration feel of it.