This episode is the series' show and tell. It gives the viewer some great insight into firebending, the technique belonging to 'the enemy'. And it has quite some development and revelation for several characters.
The beginning of this episode shows an anxious Aang who wishes to master all the elements as soon as possible. Next to series continuity (there's a wanted poster of the Blue Spirit), we see that a lot of Earth Kingdom territory is indeed already occupied by the Fire Nation, a sign of a slowly ongoing war.
After the festival, the gang reaches the outlaws' station. Right after he gets introduced, Jeong Jeong is presented as a powerful character who has clearly and thoroughly thought about firebending, and is probably one of the wisest people in the show, some one who truly understands bending as a philosophy. The insights that he shares are a great treat for any fan wanting to learn more about the world of Avatar, especially about the different elements.
Jeong Jeong understandably refuses to teach Aang firebending, seeing as how he had trained one of the most reckless firebenders around. But then, Avatar Roku himself orders the deserter to change his mind, and his appearance is a most impressive one.
Aang, being the twelve-year-old he is, quickly grows impatient with Jeong Jeong, and even after he seems to have calmed down, he start to, literally, play with fire as soon as his master leaves, which just shows that Aang is still pretty immature.
The part where Aang accidentally burns Katara is very reminiscent of Zuko and Aang fighting in the Southern Water Tribe village (in episode two), except that this time it's Aang causing the harm.
After the flurry of events, Katara discovers an ability that suddenly changer her entire role, or, depending on how you see it, enhances it: the ability to heal. And Jeong Jeong gives us even more of his wonderful philosophy on the elements. His words on the nature of firebenders is not only directly linked to Zhao, but might be picked up on again much later in the show. Speaking of which, Aang's resolve to never firebend again also adds another detail to be dealt with in the future.
The fight between Zhao and Aang contains multiple layers of awesomeness. It has some nice fighting and cool moves, but more importantly, it is yet another clash between the different sides of the show, except this time, it is only Zhao and Aang, no Zuko. And, furthermore, Aang finally understands what Jeong Jeong was trying to tell him about discipline, and uses this against Zhao.
In the end, Katara reveals her gift, and the episode ends in a light mood, a good finish to an otherwise deep and serious episode.
Overall, this chapter was very complex and philosophical, and had a good bit of action to it. A nice addition to the series as a whole, and definitely worth its standard.