We have more information on Iroh and Ozai. So Iroh was the elder (no wonder, he looks so much older) and the supposed heir to the throne. I'm thinking Ozai killed his father. I mean, there was a burst of flame when Azulon tried to punish Ozai, and the next day he's dead? And he was perfectly healthy just before? Yeah, Ozai did it.
Azula was named after her grandfather. Interesting. And her own mother is scandalized by her evilness. XD
We still don't know what exactly happened to Zuko's mother (what was her name again? Ursula or something?). She just kinda....disappeared. Why? There was a huge spider crawling on me just when she was talking to Zuko in his sleep, so I didn't catch everything. D:
Mai had a crush on Zuko. Heheh.
Ozai's preference for Azula over Zuko is made very obvious.
THE DAGGER. "Never stop fighting," was it?
Iroh's son (Lu Ten? Gah, I'm bad at remembering names) died in battle. So did Iroh go to the Spirit World sometime after, when he was depressed? I'm imagining a sort of bring-him-back-to-life!!! thing a la Fullmetal Alchemist. XD;
...Oh yeah, the parts with present day Zuko. Zuko, you KICK ASS with those swords. Very cool. I like his hair now.
And I like that he didn't steal from that guy in the beginning because he had a pregnant wife. So he hasn't fallen to that level yet. It was strange to see him fixing the roof. His whole interaction with the Earth Kingdom family showed how he could be compassionate. It was really too bad that he had to use his Firebending in the end....and the reaction of the townspeople was predictable, but sad. And he still tried to give the dagger to the boy. :(
Man, Zuko. You've grown a lot from those angry WHERE IS THE AVATAR?! days. I am absolutely loving the character development for him this season, and I can't wait to see where it all leads up to. Because obviously he's going to be an important player later on, with all the time being devoted to him, whether it has him joining up with Aang or not (but more and more I'm beginning to suspect he's going to play a different kind of role).
By the way, those eyecatch things with the kids? You know how one of them is like "Pretend that the evil Prince Zuko is behind you!" and the girl runs around like she's on fire? I really feel that one is inappropriate because it's very obvious that Zuko is NOT EVIL and that is like the most important part of his character! And especially when it's used for this episode WTF.
EDIT: Oh yeah, I was going WTF over all the weird animals in this episode too. So BIZARRE. Though the turtle-ducks were cute. XD