The final Agni Kai between Azula and Zuko is arguably the most iconic moment in Avatar: The Last Airbender. This cathartic battle between brother and sister was the culmination of a deadly sibling rivalry and spending a lifetime suppressing the innate need for familial love from each other. Per Uncle Iroh's advice, Zuko needed backup when facing the powerfully unhinged Azula, so Katara joins him to face the Fire Nation Princess together.
After Zuko is struck by Azula's lightning and is left incapacitated, Katara captures Azula herself. Since she overpowers the reigning Fire Lord, does that technically mean Katara should have been Fire Lord instead of Zuko? u/yeaitsmeluigi6079 raises the question in a recent Reddit thread.
In Season 3 Episode 19, Katara is at Zuko's side after he helps locate her mother's killer. At the request of Uncle Iroh, she goes with Zuko to Azula's coronation to back him up after Iroh encourages him to become Fire Lord due to his 'unquestionable honor.' They were determined to defeat Azula, Agni Kai or not. In fact, it was Azula herself who challenged Zuko to the duel and not the other way around.
So, what is an Agni Kai? An Agni Kai is a traditional firebender duel used as a last resort to resolve personal and political conflicts. Because of its roots in tradition, the duel does have some legal deciding power. It ends when either opponent is burned, regardless of being dead or alive. Despite this, the recent regime recognizes that a fight to the death is more honorable, as remaining alive would be a huge disgrace and the loser might as well be dead.
How does Katara come into play? In the end, Zuko was incapacitated, technically losing the Agni Kai and making Azula the official Fire Lord. Despite this, Katara effectively usurps and captures Azula, overpowering the Fire Nation's official ruler. Ozai, who was busy losing to Aang, gave up the Fire Lord title to become the Phoenix King. If viewing this situation outside of the Agni Kai, it is Katara who left the battle victorious, therefore achieving the title of Fire Lord even for a brief moment before healing Zuko.
Yet, an Agni Kai doesn't exactly help choose the next Fire Lord. A new Fire Lord is chosen when a reigning Fire Lord designates one of their heirs to the succession in preparation for the future. This is seen when Azulon chooses Ozai instead of his firstborn Iroh, and again with Azula instead of Zuko.
Another argument presented by u/wrong-mon suggests that Zuko's legitimacy is in question due to his banishment. Ozai also once again strips him of his rights after he joins Team Avatar and subsequently betrays the entire country. His legitimacy was only validated by Iroh, who is not the reigning Fire Lord. Still, there is his birthright to consider, which itself cannot be changed no matter how hard Ozai tries.
Still, if Katara were to become Fire Lord, the consequences could be devastating to the world of ATLA. Fire Lords can only be powerful firebenders, and Katara is a waterbender. Rulers from different nations are possible, but this doesn't happen without a fight. Something like this could mean all-out war between the Fire Nation and the Water Tribes. Katara as Fire Lord could bring a definite end to the delicate balance between the nations Team Avatar fought so hard to achieve.
The entire purpose of the Avatar is the bring peace to the four nations, yet the Fire Nation along with the rest of the world viewed Aang with distrust. Understandably, the Avatar hasn't been around for 100 years and most people weren't alive to comprehend the Avatar's power and influence. The fact that the Avatar returned in the form of a seemingly incompetent child further proves this point. Needless to say, if Zuko lost the Agni Kai that day and Aang ordered the Fire Nation to refuse Azula the throne, he would be faced with outrage and a civil war would surely devastate the nation.
In the comics, the people of the Fire Nation didn't see Zuko as a legitimate leader because of his banishment and the shame that came with it. Still, as pointed out by Reddit user u/Sinister_Blanket, he was with the Avatar who eventually won the Fire Nation over when he spared Ozai. Combined with this newfound trust by association, Zuko's birthright and honor bestowed by Iroh, Zuko's ascension to the throne couldn't have come at a more perfect time. Since Team Avatar captured both Azula and Ozai and stripped the latter of his powers, the Fire Nation was briefly without a ruler. Zuko would have been the only right choice in order to promote and preserve the balance between the Four Nations.
Geopolitical ramifications in the world of Avatar are something viewers can now appreciate as adults, and it adds an extra layer of complexity to an already incredible series. The comics and novels explore these complicated dynamics even further, so they are an essential read in order to comprehend what really was at stake. Whether on the side of Fire Lord Katara or not, she was definitely a key factor in creating the balance that would ultimately save the Four Nations from self-destruction.
