The Firebending Masters

Synopsis
Zuko is beginning to teach Aang firebending but Zuko can only produce a smaller flame than usual. When Zuko expresses his concern over his weakened firebending to the group, Toph encourages him to learn from the original source and talks about how she learned earthbending from the Badgermoles, the original earthbenders. Zuko says that the Dragons were the original firebenders, but that they have been extinct for some period.

Zuko then tells Aang about a civilization that died out thousands of years ago called the Sun Warriors. It turns out that the current Firebending nation got their skills from this ancient race and twisted it into a more aggressive style.

Zuko and Aang fly to the ruins on Appa where Zuko reveals that the Dragons became extinct because they were hunted for glory and the title of 'Dragon' after Fire Lord Sozin popularized it. He also tells Aang that the person who killed the last dragon was his uncle, Iroh. While exploring the ruins, Aang and Zuko find various statues from which they learn a firebending form called 'The Dancing Dragon' by imitating the statues' poses. They are then captured by the Sun Warriors who accuse them of attempting to steal Sun Warrior treasures. After explaining their desire to learn the true form of firebending, Zuko and Aang are put through a ritual where they have to carry a portion of the first fire up a mountain and present it to the true firebending masters. Surprisingly, these firebending masters are two dragons. Losing their portions of fire in shock, Zuko and Aang earn the respect of the dragons by performing the firebending technique that they learnt from the statues, dancing with the dragons in the process. The dragons then breathe beautiful, multicolored flames into a twister around Aang and Zuko, teaching them the true and harmonious way of firebending.

When the dragons return to their caves, Zuko understands that he couldn't firebend because he lost his "inner fire". He used to draw his fire from rage, anger and his burning desire to capture The Avatar. After he joined Aang's group, he could no longer draw from this source. But after watching the dragons, he learns that he can draw from the true source, ie: his desire to help the Avatar bring balance to the world. Aang also becomes less timid thanks to Zuko and bends a fireball of his own. We then learn from the chief that Iroh was the last outsider to visit this place and be deemed worthy by the masters, and that he lied to keep the dragons alive so they could continue on.

The show ends with Zuko trying to convince the group at the Western Air Temple just how serious and ancient the new technique is, but they keep laughing at him and how it's called 'The Dancing Dragon'. You can see that he's gradually coming around.

Trivia
Iroh also has the title "Dragon of the West". This was previously explained to be because of his Breath of Fire ability. However, this episode explains that Iroh earned this title through apparently slaying the last dragon. It seems that Iroh considers himself as a Dragon because of his Fire Breath Technique but the Fire Nations considers him a Dragon because of his 'apparently slaying the Last Dragon.