<p>I don't think she lost initiative so much as she lost her mind; being betrayed by her closest friends unhinged a mind that was already addled by unresolved issues from childhood and a minor inferiority complex and with the loss of her mind, she could no longer stand as a viable candidate for the throne or any position of power. Her goals becoming "nonsense" could be attributed to said insanity, but i don't think her goals are nonsense. Her goal in The Search was a bit poorly-planned; even if Zuko had been Ikem's son, rather than Ozai's, nobody would have believed a former mental patient, certainly not on the word of a letter alone (and even if they did, they'd probably just crown Iroh rather than Azula). Her plans in S&S make sense to me; having lost much of her credibility, she no longer had a hope of ruling herself, so the next best thing was to make Zuko into the ruler she wanted. It didn't work out in the end, but it still made some sense.
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