Bump, apropos of nothing. Been rewatching the original series a bit and yeah, quite concerned about whether a live action adaptation is possible at all. The idea of bending is uniquely suited to the context of a cartoon primarily aimed at children really - you get to have brilliant fight scenes with high stakes and intense emotions, without it ever coming across as too violent or making the more whimsical elements feel out of place. I don't know why you'd just throw that advantage away.
I have a feeling a "remaster" would be more appropriate, basically. This would still add value because I imagine a lot of people (children particularly) wouldn't be prepared to watch it as it is currently on Netflix, with the 4:3 aspect ratio etc. I see Into the Spider-Verse as being a target they could aim for in terms of quality - it very much has its own look and identity, and has the kind of playful visuals that any Avatar adaptation would need to make its gags work.
Live action probably means an astronomical budget would be required to do it justice, and the casting would be incredibly difficult. Trying to cast Aang and Toph means finding two 12 year olds (or at least children who can pass for that age) who have brilliant dramatic and comedic chops, as has been said. But, and I think this is the part that makes it extra difficult, they would also need to be able to pull off the physical aspects of the role believeably. With a cartoon you can just have actual martial artists doing motion capture / reference for rotoscoping (as I suspect they did for the original series). There's also the need to avoid whitewashing of course, which probably applies regardless of how they choose to produce the show, but it's another criteria that makes finding the right child actors seem extra difficult, and I would say bordering on impossible.