No real character development, no big plot advancement, and no recurring characters other than the gang: This is a filler episode. But as such, it has one thing that is noticeable: background development. Furthermore, this is one in a line of character episodes; it focuses heavily on one character, in this case Katara, and the events transpire around her. 'The Headband' can be seen as an Aang episode, and 'Sokka's Master', the following one, will, as the title suggests, most likely focus on Sokka.
The first thing to note is the extremely strange recap, even though it gets the point of the gang sneaking into Fire Nation territory across, as well as them taking up disguises. It seems their new looks are going to stay for a while, which is good. Seeing our favorite characters in new outfits not only brings some variety into the show and eliminates static character appearances, but also adds another visual separation from the previous two Books, making Book Three more special.
One thing that this episode packs is amazing artwork. The scenery shots of the river, albeit it being polluted, are breathtaking, and create a feel of simple life that is prevalent in the town and the story. In fact, the fishing town seems so idyllic and, to me, familiar, that the gang's bending appears out of place.
There is also a lot of background development. This episode in no way advances the main plot, and it doesn't have a great deal of character development, but it shows more aspects of the Fire Nation, as well as the gang coping with the invasion plan. It's interesting to see that while the urban parts of the Fire Nation are very nationalistic and rich, there are also poor villages that suffer greatly from the war effort, and do not support it at all.
Before I watched the episode, I had a hunch that the Painted Lady would be Katara, and indeed, the episode does not shroud this fact into a great deal of mystery. That doesn't stop it from being mystifying, however, and many of the scenes in which Katara takes up her alter ego have a very spiritual feel about them, a great part of this coming from the beautiful animation and color scheme. The fight scene at the end even gives up action in favor of calmness, something that fits extremely well. And they show just how much her waterbending has improved.
Even though this episode does not further the big plot, it is still very beautiful, and would deserve a high grade, were it not for some small things that really irk me. The first is Dock. He is probably meant to be a comical connection to the town, but his antics and switching between brothers goes a bit far.
Along with that were the obvious anime elements that managed to get into this episode. Things like sweat drops, anger veins and twitching eyebrows. Even though the show's art is based on anime, and it did have exaggermation before, these small "trademark icons" are new, and distract heavily from the immersion that the show otherwise accomplishes so masterfully.
The last bad thing is the scene after Katara beats the Fire Nation soldiers. The townsfolk was applauding her, which is just plain wrong. You don't applaud a spirit, you drop to your knees and thank her. And the dialog seemed very forced.
Overall, while this episode is not totally great, it is beautiful and very nice. It has some stunning artwork and animation, and the very last scene fills this episode with purpose. While it is partly a filler, it is a good filler, which also expands Sokka's and Katara's relationship, and allows the plot to slow down. This way, it can start to gather momentum as the series progresses to the grand finale. 'The Painted Lady' accomplishes a good change of pace.