Not sure if Lynch actually watched Bye Bye Birdie (1963) but the imagery in MD's opening Jitterbug contest scene certainly hits home the style of 1960 musicals.

Two examples from Bye Bye Birdie:

1. The opening and closing scene with a starlet performing a song before a blue (aka green screen) background. The scene was actually meant to be superimposed on footage but the director did not have the funds to do so. So they left it as is. This mirrors the magenta background in the opening MD dance montage which may also have failed to get the proper treatment.
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2. The Telephone Song concludes with extras superimposed on an image, also reminiscent of the MD opening. Skip forward to 3:12.
   
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I noticed an MD-esque moment in the horror flick "The Babadook" (2014) which is about a mother slipping into insanity. In this scene the blond-haired protagonist goes to sleep, there is an inexplicable layer of smoke and the view repeatedly goes in and out of focus from her POV.

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