<p>The Water Tribes derive their power from the moon, and their lives from the ocean. Zhao's goal was to conquer the Water Tribes, not eradicate them. He wanted more people that he could subjugate to the will of the Fire Lord. It's easy to defeat a people that has been disarmed of its greatest weapon (in this case, waterbending), but it's hard to rule over that same population once you've killed them all. Eliminating the moon spirit and sparing the ocean spirit ensures that the Water Tribes would remain alive to be subjects of the Fire Nation, but in no position to pose a real threat.
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