The directors and the producer say on the commentary track of the DVD that they had Ed like that because hyenas are known for their "laughing" so they wanted to have a hyena that laughs a lot instead of speaking. Or something along that line. Listen to the commentary track of the DVD. There's a lot of interesting information about the movie and its making given out on it. (:
I Agree with bendaimmortal! They did it too so it can be funny so children have something to have a good laugh at, although i am not a kid but i still will always love this movie and the TLK2 too forever!!