After my initial reaction of, oh HELLS NO, I've come to the following conclusion. It's not so much the idea of a live-action Avatar that horrifies. It's the Hollywoodness of it.
It's not like other manga/anime haven't made decent enough live action versions. But those versions were never dumbed down for their audience, and their producers got it. Live action alone isn't a toxic medium. (Though seriously, magic kung fu animated? Cool. CGI-ed to death? Probably going to be bad no matter what).
But I think we're going to end up with a product that's more Eragon and less, uh, Crouching Tigers, Hidden Dragon in style. Avatar was such a non-commercial show for the most part (it was more about the story than the trading cards if you get my drift), that I don't think people in Hollywood will get it. And I really don't understand why Nick would want to mess with their franchaise this early.
Not to mention the casting. I maintain there is no way they will do this correctly. No way. The cast would have to be entirely non-white if they wanted to follow the show. Given the age range of the characters, they would mostly be non-white unknowns. Do you know any studios that would bank on that? There's a reason why even "Memoirs of a Geisha" ended up with name-branded Chinese actresses in the main roles.
Just saying.
And if they pull the "color-blind casting" card, I'll puke. Seriously.
ETA: Final thought; this really doesn't affect me either way I guess. The only thing I'll go livid over, is if there is any compromise of the original product because of this.
ETAA: Also, this was probably released to trump the other "Avatar" movie, in a battle for the name-rights. I doubt it'll happen for awhile. And I'd like to hear from Mike and Bryan on this.