Muhlegg, one of the world's strongest cross-country skiers, finished first in the most difficult cross-country skiing event at the Olympic Games, the men's 50-kilometer on Feb. 23. Russia's Mihhail Ivanov finished second, and Andrus Veerpalu from Estonia came in third. Veerpalu had previously won the gold, and his compatriot Jaak Mae the bronze, in the men's 15 km classical race on Feb. 12.
But Muhlegg's post-race drug test was positive, and he was stripped of his gold, moving Veerpalu one step up on the podium.
Veerpalu, who received the silver medal at home on Feb. 26, will have to send his bronze medal back this week.
A huge crowd gathered in Tallinn's Town Hall Square to meet Veerpalu, Mae and their coach, Mati Alaver.
Prime Minister Siim Kallas and Parliament Speaker Toomas Savi gave Veerpalu an Estonian flag from the Long Hermann tower - a tradition that began after the 2000 Olympics in Sydney, where decathlete Erki Nool won gold.
Veerpalu said he was very pleased to bring joy to the country, Mae, who arrived back home last week, celebrated his 30th birthday on Feb. 25. He thanked the crowd for all the birthday congratulations he received.
Olympic success brought the skiers more than just pats on their backs. The Estonian government also came up with some cash.
Veerpalu received 1.75 million kroons ($97,200) form the government. Alaver received 1 million kroons, and Mae received 600,000 kroons. All three also received money from sponsors.
Other Olympic news:
Sandis Prusis, pilot of the Latvia 1 bobsled, finished the four-man competition in seventh place, 1.55 seconds behind Germany's Andre Lange, the gold medalist. It was a disappointing week for Prusis, who had hoped to medal at what is thought to be his last Olympics. Gatis Guts, pilot of the Latvia 2 sled, finished the competition in 12th, 1.93 seconds behind Lange.
The only athlete from the Baltic countries to compete in any of the alpine skiing events was Latvia's Ivars Ciaguns, who finished the men's slalom in 26th place, 13.6 seconds behind the winner, Jean-Pierre Vidal of France.
In the men's 4X7.5 km biathlon, the Estonian team took 11th place and the Latvian team finished 17th.
In the men's skeleton race, Latvia's Tomass Dukars finished 21st.