The basic idea of morphing had actually already been effectively executed in animation as early as circa 1835 with a fantascope/phenakistiscope disc showing the head of a woman transforming into a witch's and then a monster's. In 1908 "Fantasmagorie" by Émile Cohl contained many fanciful transformations in simple, but very effective, line drawings. Also "La Faim / Hunger" from 1974 by Peter Foldes contained similar transformations, but before "Willow" it was only a handful of animations that made use of the idea, while live action movies mostly relied on dissolves to achieve transformation effects. The digital morphing effect to allow photo realistic morphing transitions that became very popular was mostly developed by ILM especially for this scene.
