Since both the Applied Arts Museum and the Ethnographic Museum are closed, I was thrilled when I went to the Mucsarnok today (on Heroes Square, opposite the also-closed Museum of Fine Arts) and discovered that the current exhibition covers revived handcrafts. I spent about two hours there. A variety of media are on display, including works in pottery, wood, leather and metal. There are also hundreds of painted eggs, but the most common medium is fiber: embroidery, weaving and felting. The quality is very high, and although the techniques used are generally traditional, a lot of the objects are contemporary in style. Labels have been translated into English--something you can't always count on with temporary exhibitions.
The exhibit runs through August 20. The museum is open Tue, Wed, Fri, Sat and Sun 10-6 and Thu noon-8. It is closed on Mondays and on May 22.
Metro Line 1 to Hosok Tere. Free with Budapest Card. I've seen the entry fee variously listed at 2200 Ft and 2900 Ft, so I'm not sure what the deal is.