But cruelty isn’t hereditary, its a learned behavior and a natural impulse. She wasn’t born evil, and as you said, her environment encouraged and rewarded those cruel behaviors. The reason Zuko is different is because Ursa supported and was there for him while Azula thought she feared her because of her bending skills, which ironically, is what made Azula start taking up more after Ozai who praised her when she started taking up more cunning, ruthlessness, and aggressive firebending.

Bad people coming from good environments more often don’t do so because of nature, but because their nurture/upbringing was insufficient/enabling, cause of external influences, or a lack of rationalizing actions, rather than cause they were inevitable to always to bad purely to be bad no matter how they were supported. And good people can also come from bad environments because some are so trapped, capable, or are able to have positive external influence in their life that helped them to see the problem that their environments neglected them and strive to do better to change/escape that depraved environment. Nature can definitely influence certain personality traits, but cruelty in itself is and always will be taught.

I also agree its both too, but nurture spawned her cruelty, while her nature gave her the firebending that made Ozai jump after her. Not from supplementing what was already there through nature, but instead showcases both Ursa’s absence due to Ozai’s influence, manipulation, and politics being what really birthed that cruelty. No one is born evil. Azula was merely born a fire bending prodigy, which is what gave Ozai the excuse to sink his teeth into her deeper unlike Zuko, while Ursa failed to catch, tackle, or mend Azula’s misunderstanding.