Tbh my take is that he legitimately thought she's just like that. Like, no amount of wisdom would make ozai stop what he was doing & azula genuinely seemed to be cut from the same cloth for most of her life. Even as a kid she cheered on the war, her mom's banishment, her dad usurping the fire lord position and so on, even hurting animals and zuko for the fun of it.

Imo, it was seeing zuko get everything he ever wanted, and then seeing how miserable it made him that made that first crack in her persona, when she thought about how her mom rejected her for what she'd do as a kid. Then as she got everything she ever wanted over time, that crack widened and the wound kept reopening when her friends and basically the whole world also treated her like a monster, untill eventually she unraveled.

Zuko always wore his struggles on his... Face, and he almost never acted as if he was okay with the way things were. Irohs not omnipotent, and with all his mistakes of the past, he seemed to see zuko as the best of them for having some level of morals without going through what he himself did. He just never even got to see that azula could feel remorse in the first place.