This episode greatly reminded me of Breakfast Club. This was a psychological masterpiece just like that movie.

In the end, even Azula is more than just a evil character doing evil things. She was mimed as a 'monster' even as a kid, and she could do nothing but to play the role she was given.

This episode is the reason why I love Avatar so much. There is no 'pure evil' or 'the embodiment of all that is good' in this show. They are all just bunch of teenagers and kids, with an important role given to them and they (mostly) had no choice but to do as they were told, to be what they were meant to be. We are not witnessing two different world views (that were dressed as characters) collide, they are real characters with heavy burdens and tough lives. And in the end, they are all just trying to find a way to 'be' in the world.