The following idea hinges on Zuko actually being fairly out of character. Either it's AU because he develops differently, or, what the hell, maybe he's looping. In either case:
Zuko Wins
Early to mid-Book One, Zuko comes up with a cunning plan to capture the Avatar. He recruits a reluctant Ty Lee out of the circus to do him a little favour by appealing shamelessly to her patriotism.
While shopping (episode with pirates), Aang, Sokka and Katara run into a pretty girl (thinly disguised Ty Lee) who flutters, makes nice and finally hugs Aang goodbye, disabling his chi. A shirtless Zuko springs out upon them and Ty Lee 'runs to Katara for shelter', hiding behind her. More chi-blocking.
Bereft of their bending, Aang and Katara (further distracted by shameless display of pectoral muscles by Zuko) are disadvantaged and the arrival of Zuko's crew has them captured and carted off to his ship. Here Zuko splits them up and sets about keeping them confined. Ty Lee devotes considerable time to keeping Aang helpless, which among other things means she's pretty much babysitting him the whole time and being who she is, talking to him.
Zuko tells Ty Lee thank you, assures her that he will give full credit for her part in capturing the Avatar and offers to drop her off at the circus again. Ty Lee offers to go along back to the capital, in case he needs more help confining the Avatar again. Surprised, but pleased, Zuko agrees. He arranges for Sokka and Katara to each be sent away on a different ship, using the three as hostages against each other: i.e. if Katara tries to break out then word will be sent and Sokka or Aang (or both) suffer consequences.
Zuko returns to the Fire Nation in triumph. Ozai is slightly impressed. Azula is fuming (not least because Ty Lee seems to be helping Zuko) but outwardly pleasent. The court wastes no time latching onto the new hero... and Zuko realises just how insincere and what a mess the whole thing is. Aang is locked away in a dungeon and Zuko's firm but not unkind captivity is replaced by brutality. News arrives that Omashu has surrendered to the Fire Nation.
Azula arranges for Zuko to take over the North Pole expedition, to get him away from home and also to further alienate Zuko from Zhao and that faction of the military. As Zuko has indicated his personal feelings that the Water Tribes are not a priority, she also hopes he'll disgrace himself. Instead Zuko indicates determination, if not enthusiasm, while privately concluding that he's damned if he goes along with this.
With help from Iroh, Zuko orchestrates a sudden coup disguised as an attack by Earth Kingdom extremists. Ozai is injured and while receiving treatment, poisoned. Officially he is recorded as 'dying from his wounds'. Zuko takes the throne, placing Azula (as his current heir) in the care of Iroh. In light of the Earth Kingdom attack, he cancels the North Pole attack and instead indicates he will seek diplomatic options against the Water Tribes.
Ty Lee is placed in charge of Aang's captivity, immediately improving his circumstances. Zuko makes a point of visiting and apologising. He also tells Aang that he intends to end the war and create a world where they don't have to be enemies. Aang is sceptical, but he also has an affectionate Ty Lee playing nurse. He's allowed to meet Katara and Sokka (although not together) and the two siblings also get to meet, to ensure that they are still well. Zuko offers Sokka a chance to be ambassador to Hakoda, something of a hard sell.
Iroh takes Azula away on a tour of the Fire Nation while he therapises her. Zuko starts re-arranging his strategy against the Earth Kingdom. This includes handing Omashu peacefully back to King Bumi who is surprised, gratified and lionised by the population who sees this as a sign of his mad genius. Bumi agrees to enter into negotiations on behalf of a confederation of southern provinces and tribes within the Earth Kingdom.
Aang and Ty Lee grow closer, much to Katara's distaste when she is allowed to visit. Sokka manages to make contact with Bato who agrees to relay a message to Hakoda, largely on the basis that Katara is a hostage. Zuko agrees to meet Hakoda at sea and sends Sokka to act as an emissary to the Northern Water Tribe while he takes Katara with him to the meeting.
Zuko releases Katara at the start of the negotiations, to show that he does not intend to use her against her father. Hakoda eventually agrees to take his warriors home with supplies provided by the Fire Nation and to meet again. Zuko makes it clear that this is not Danegeld - it's a carrot, and the stick is the fact that the Southern Water Tribe's women and children are largely undefended.
Iroh brings Azula back after she had a nervous breakdown. Zuko is not amused that she has started hitting on him, although Ty Lee and Aang think it's hysterical. When Zuko blames the Fire Sages for 'wanting to keep the line of Sozin pure' they ask him what his marriage plans are. This is added to the negotiations upcoming with Hakoda and Bumi as the notion of a diplomatic marriage is actually popular with a lot of the court.
Sokka returns to the Fire Nation capital advising that the Northern Water Tribe want to have representatives at all negotiations. It is arranged that all parties will meet at once. During a sudden eclipse, Sokka tries to free Aang. He and Zuko fight and wind up crashing into Aang's cell while he and Ty Lee are engaged in making out. With the end of the eclipse, Zuko wins the fight and sends Sokka back to the Southern Water tribe. He also decides to allow Aang more freedom around the palace, hoping that his meeting other member of the Fire Nation will reduce any tendencies to demonize the whole people.
Negotiation day. Katara (who is accompanying Hakoda) throws death glares at Zuko at every moment except when Aang and Ty Lee are present (the Avatar formally opens proceedings). The newly formed Earth Confederation formally severs ties with the Earth Kingdom's government (although not, as such, the semi-divine Earth King) in Ba Sing Se. A treaty makes peace between the Water Tribes, the Earth Confederation and the Fire Nation, conditional upon marriages between the Zuko and brides from all three nations (the fire nation bride's children will be his successors). Zuko manages to insist that the Water Tribe bride should be from the North.
Yue and Toph arrive as their nation's bridal candidates at about the same time that Zuko is rejecting firmly Azula's self-nomination as the fire nation bride. Zuko is more than relieved that only one of his brides is of age for actual consumation of the marriages and vaguely hoping that whoever he winds up marrying from the Fire Nation will get on with at least one of the other two wives. Aang is profoundly unsympathetic.
