I'm fascinated to find all of this. I wanted to teach my 2 year old daughter the words to this game. I learned it in kindergarten in Walla Walla, WA during the '79-'80 school year. I could only remember these words:

Down by the banks of the hanky panky,
where the bullfrogs jumped from bank to banky,
...[don't remember]...
with an eeps oops ops
and a
Ker-plop!

    Ours didn't have any lyrics more suggestive than "hanky panky", nor any specific cultural references that would date it. (I think Michael Jackson was probably still with the Jackson 5 at that time.) I'm only missing one or two lines in the rhyme, it was definitely a shorter version.
    So far noone's version quite matches up with mine, at least as I think I remember it. Nor do I recognize the endings of any of the others. If anyone seems to know 'my' version, I'd love to know the rest of the words. (I've created a new email account just for this sort of thing: figgyfrog@gmail.com) Otherwise, I guess I'll just make it up! When I come up with my 'new' version (based on those in this thread most likely), I'll add it.

    We played a circle handclap elimination game, with our palms facing IN towards the center of the circle:

    With arms outstretched, hands were layered so that each persons' right hand was in front of the neighboring left hand. When your right hand got sandwiched by your neighbor's hands, clapped between the two, it was your turn to swing your right arm and make a sandwhich around your other neighbor's right hand, to your left. The owner of the hand sandwiched at "Ker-plop!" was out.

    The last two players had a sort of pushing arm-wrestle:

    Right hands linked in some sort of arm-wrestle fist (I can't remember exactly), while still standing, the last two would alternately push and pull. This was syncronized (sp?) so that the back and forth could increase in speed. You tried hard to get it going fast so that on "-plop!" you could try to take advantage of the inertia and freeze your arm in the 'push' position to win. However, if you froze your arm in 'push' before the rhyme reached the very end, even on "Ker-", then you lost.

    One kid tried to take advantage of this by freezing his arm in 'pull' on "Ker-" to make it look like the other kid was trying to win-too-soon. As we were all kindergarteners, it wasn't very hard for the supervising (sp?) adults to figure it out. Clever of him to try though!