I've seen this concept before, but I want to brainstorm my own.
- First, Ozai wouldn't see Azula as a stain the way he does canon Zuko. In Fire Nation tradition, firstborns have certain expectations & privileges/rights the secondborn doesn't. It's part of why Azulon gets incensed at Ozai+ why Zuko believes his throne is his birthright+ why Ozai can't just make Azula the head of everything from an early age despite his favoritism. If Ozai's firstborn is the prodigy, he'd put all his cards into him. Even if his secondborn was great, which Azula probably is, his firstborn trumps anything his secondborn can ever achieve because He's the First, He's the Heir and He's Better.
- I wouldn't give Zuko blue fire. Rather, I would give him flames of pure gold. That feels more him.
- Azula being a weak Firebender would not matter as much because with a prodigy Zuko, Ozai's attention would be spent on him. Azula is the spare heir but she gets grace canon Zuko never got because, well, this is what the Fire Nation expects from its heirs. A talented firstborn + a backup free to get shipped into an arranged marriage for alliances. Thus, Azula would be likely to be neglected yet free to find her own path.
- Let's assume, though, some elements of their personalities stay the same. Zuko starts curious, sweet, good-natured, while Azula starts analytical, studious, and tactical-minded. I think Ursa would still feel compelled to gravitate toward Zuko, though she wouldn't necessarily be unfriendly to Azula (she wouldn't be parroting Ozai + Ursa would be much better at stopping Zuko from parroting Ozai). While Azula wouldn't say her mom thought her a monster, she'd feel neglected by both parents, always being the second choice behind Zuko.
- As this Azula isn't toxic, she'd grow closer to Mai & Ty Lee and their friendship would become extremely tight-knit, with all girls united in their kind of mutual escape of parental neglect. Azula might even befriend them in hopes of her learning skills like chi-blocking. Perhaps she ends up learning the way of the sword with Piandao, but that doesn't need to be the weapon she learns. Or, she could learn Many weapons + Firebending and be like a jack-of-all-trades. Maizulee, perhaps?
- With Azula overlooked by Ozai, you would expect a post-grief journey Iroh to latch onto Azula here. As Azula was never taught to hate him, they'd have a much better relationship, even if Azula feels like Lu Ten's death wasn't avenged at Ba Sing Se. But to me, there is something interesting about the idea of Iroh still latching onto Zuko here, leaving Azula alone. It feels more thematically fitting. Everyone puts their cards in Zuko, and this leaves Azula afraid of people leaving her. Azula might even see Zuko liking Mai as a worry as she thinks Zuko will steal another person she loves away from her. This could making for very compelling Maizula or Maizulee drama.
- With Ursa gone (I still think that'd happen), I don't know how much Zuko would believe Azula when she tells him Dad's gonna kill him. I kind of get the feeling that Zuko and Azula aren't very close. They don't have a negative relationship and get along well when they do, but Azula likely feels some kind of resentment for Zuko taking all the attention while Zuko just never got the chance to grow close to Azula.
- Still, Azula would get Mom's attention that fateful night, and would definitely prompt her to act. Maybe her mom gives her a more definitive statement of love and regret. But the result is that Zuko ends up definitely becoming more Ozai-like without a parent to counterbalance, as even if Iroh chose him Zuko had too much time alone with Ozai along the grief journey.
