Would the movie Donnie Darko be better without Jake Gyllenhaal?

No, he basically carried that film.

Agreed, but Mary McDonnell as the mother is also absolutely amazing.
- I read that as Malcom McDowell and I was ok with that.

Muppets Donnie Darko where everyone is played by Muppets except Frank who's now played by Jake Gyllenhaal without any costume.

In my book, that puts Bean Bunny in the role of Darko, just so there's a reversal of the "Why are you wearing that stupid bunny suit?" jibe and counter-jibe.
I mean, Muppet Christmas Carol kept Fozzie out of the rest of the movie just so they could make a Fezziwig/Fozziwig pun, so such a massive cast decision for the sake of one gag isn't out of the question.
Now, there are other rabbits in the Muppet cast, but I think Bean is the best known, and probably has the most range to go from cute to creepy without it being too obvious from his appearance.
The firing of Bean's voice actor (Steve Whitmire) makes this somewhat less likely, but I think they could recast Bean's voice more easily than for Rizzo "ain't comin' back until Steve does" Rat or Kermit, and they weren't all that picky about Kermit.
Can I instead pitch that the human is Amy Sedaris as Kitty Farmer?
- But then you miss out on the best line in the film being spoken by a muppet:
  He asked me to forcibly insert the lifeline exercise card into my anus!
  If Hilda delivered that line it would be priceless.

Arguably worse. Donnie Darko owes some of its success to Gyllenhaal’s quirkiness.

I guess if you got Freddie Highmore (Bates Model, The Good Doctor), but he was 9 when Darko came out. So, also no.

Richard Kelly (writer/director) seemed to think the movie would be better if they just explained everything. And that’s why we don’t like the Director’s Cut. I think it was done before but a lot of people had to have it explained to them.

I thought it was fine with him?

Nick Cage, that goes for any movie as well.

Are you confusing Jake with Jared Leto?? Jake is a great actor, while Jared is fucking garbage!