I… It’s not like I didn’t predict this ask.
1. So first things first. how does Ursa get into a position to become regent? The answer is that Ozai dies. The poisoning does not go to plan. Ozai can’t help but gloat over his father’s intended demise, and with his last breath, Azulon fries his son with lightning. Ursa has to think fast. She claims that the second prince was assassanated, and Firelord Azulon died of the shock of seeing him like that. Frantically she writes to Iroh. but he does not answer. She is forced to consolidate power on her own. She claims to be ruling in his stead until he returns, and indeed she intends to step down. She just neglects to mention he never appointed her.
2. And then Iroh does return home a wreck. He has no interest in the throne she so capably kept warm for him, and sinks deeper and deeper into grief fueled mysticism and attempts to journey to the Spirit World. Ruling on Iroh’s behalf while he is right there in the palace is growing old fast, and Ursa’s position is becoming increasingly tenuous. This is something she tells to Iroh. Rather than pull himself out of his grief. Iroh abdicates in favor of his nephew and appoints Ursa his regent.
3. Ursa is furious. This is not what she wanted, and Ursa sees it as Iroh abdicating not only the throne but his responsibilities, and his duty. This is not something she will forgive easily.
4. This does mean she now has near complete freedom over her children’s education, and that Zuko is suddenly officially Firelord. Azula can stop scheming now. She has no path through the throne that doesn’t go directly through her brother. She doesn’t stop scheming of course, but she adopts the dream of conquering the Earth Kingdom and ruling the colonies as Zuko’s viceroy. This is a dream that Ursa encourages, being an imperialist. Azula’s dreams, motives, and insecurities change under her mother’s careful guidance, as she builds a more resilient sense of self and learns to stop using others for her own gratification.
5. Iroh meanwhile is nursing his newfound anti-imperialism, which given how he decided he would rather dump the responsibility of ruling on somebody else in Ursa’s eyes… She disagrees with him, and she doesn’t see why he should get a say now.