This is a basic tutorial by Cyber Controllerl, and is much like how I make puppets, if a bit simplified. You can make better wire armatures if you like, and there is no need for skin on the puppet if they are clothed, just the hands, neck, and head show skin. My armatures are a little more complex than the one shown here, so with a little testing you could work up a system of your own, that works.

http://www.youtube.com/watch?v=lxd9KN_e0aU

Here are some finished people puppets using that basic technique, the puppets have foam bodies, the hands are made of cut cushion foam, latex was added to form the shape it, and then painted with latex mixed with acrylic paint, the clothing in this case was all glued together, which I don't suggest with such a long movie planned. The heads are sculpted in Super Sculpy, but not baked.

http://www.youtube.com/watch?v=90Ks7kWW_Oo

Tim