Azula had been in prison for three days since Sozin's Comet departed, and the time had finally come for the council in charge of post-war clean-up to decide her punishment.
Many prominent leaders and Generals decided they should eliminate her, claiming that she was too dangerous to be left alive since the Avatar refused to take away her bending.
Aang's opinion was that Azula was not beyond redemption, so when Katara got word that Azula's punishment was the death penalty, she offered an alternative solution.
Katara's alternative punishment passed the majority vote and swiftly was executed to ensure the Fire Nation Princess faced justice, granting Katara full custody of Azula as her personal prisoner.
However, Azula would have rather died than become Katara's detainee.
Luckily, Katara had developed a new Waterbending technique using water from the North Pole's Spirit Oasis since their last encounter, which didn't give Azula much choice.
"What an honor. The Avatar's little Water Tribe peasant. Come back for another round?" Azula chimed as Katara entered her cell. Trying to provoke Katara beyond the iron bars.
"Azula. The council decided on your punishment. They wanted you dead, but I convinced them to let me control your sentence." Katara explained, pulling a vial of Spirit Water from her bag.
"I don't need your pity, little Water Tribe girl." Azula spat, not wanting to owe Katara any favors.
"Pity? No, I learned during the war that death was far too lenient a punishment for what you people did during the hundred-year war. By the time I am done with you, I promise. You're going to wish I let them kill you." Katara said coldly, popping the cork off the vial.
Azula was surprised and a little impressed. However, she doubted Karata had the will or the nerves necessary to properly back her threats. "Do your worst, peasant!" Azula growled, trying her best to act tough, unwilling to give Katara the satisfaction of seeing her beg.
"Gladly," Katara announced as she began streaming the water around the restrained Azula, snaking it up and down her body.
The water began to glow a purifying shade of white, forcing Azula to struggle as her body started to shrink in size, allowing her to slip free of her shackles for the first time in days.
Azula was horrified as she watched Katara grow taller and taller, to the point where she was towering over the former princess of the Fire Nation like a living mountain. After her body began to diminish, it didn't take Azule long to shrink to the point where she was no more than an inch tall, sitting on the floor of her cell at the size of a bug in Katara's shadow.
"Well, how does it feel? How does it feel to be weak and powerless and an enemy much bigger than yourself? How does it feel to be so helpless I could easily just," Katara paused, taking a step forward and lifting her foot over the helpless tiny girl, forcing her to look at the bottom of her Water Tribe boots.
"...crush you? Crush you like the bug you are! Because that's how everyone felt about the Fire Nation during the war. Now it's your turn, and I have the honor of being your Warden. And trust me, Azula. I'm going to enjoy every minute of it." Katara said, finishing up her earlier threat before boasting to belittle her new prisoner.
For the first time in her life, Azula was speechless. She would never have assumed Katara was capable of doing something like this.
"Good, I'm glad you have nothing left to say. That gives us plenty of time to move you into your new prison cell. From now on, you'll be attached to me, twenty-four/seven." Katara teased, leaning down to pick up Azula.
Where on her body does Katara plan to keep Azula?
1. Katara's looking for a new necklace she could wear alongside her mother's betrothal necklace. Affixing Azula to the end of a piece of string and allowing her to hang from her neck between her boobs.
2. Katara takes off the same boot she just threatened Azula with and drops the former Fire Nation Princess inside, making sure she found a nice warm corner under her toes to spend her days.
3. Katara picks up Azula and drops her down the back of her panties, wedging her prisoner deep between her buttcheeks, so she could feel her body move everytime she took a step.