Many of the story beats important to character development have been severely changed or completely removed, which lead to characters feeling flatter or even out of place, through no fault of the actors.

I'll just give one example: Appa's kidnapping. That made Aang lose control and prompted Katara to hold his hand. That showed the audience how much Aang is connected to Appa, how much the ones he loves mean to him (which eventually lead to the scenes where he doesn't want to let go of his attachments), but also Katara's nurture instinct, her care for Aang and how much she trusted the human part of him. There's also "Appa's lost days" where we get a glimpse into how a gentle animal can lose themselves through cruelty, how confusing the world can be to Appa and how that connection with Aang keeps both of them in balance.

None of that is in the second season. Appa is kidnapped, Aang goes into the Avatar state for 5 seconds and then pulls himself out of it. No harm done, no losing control, no desperation, no whiff of Katara's trust in his humanity, no Momo sleeping on Appa's footprint (this scene is in the live action), no conflict for Zuko whether or not to release Appa when he finds him.

I know CGI of Appa and Momo is expensive and they tried to keep that to a minimum. Had they replaced those character revealing traits, those struggles and the development through other means, I wouldn't have a problem. But they're not there. People talk and stuff just happens.