Iroh dying could certainly be a catalyst for some dramatic shift in Zuko, which way said shift would go or what form and consequences it would have would vary dependant upon who was responsible for Iroh's being killed. In any case, Zuko and Iroh certainly seem tightly bound, I suspect perhaps more deeply than some sense of pride or summat might allow either to show, and the young prince would almost certainly be shaken by such an event.
I'd be a bit put out too since Iroh is my favorite character, and Mako gives him such a delightful voice.
Actually, I wonder if Iroh might be orchestrating something of a coup against Ozai by continuing to support and guide Zuko. He certainly has the ability as a strategist and I could see him having a sincere desire to remove the apparently tyrannical Ozai from the throne, but I somehow doubt that Iroh desires the title of Fire Lord for himself. Zuko could be either Iroh's intended proxy for rulership, or perhaps a legitimate attempt to win the Fire Nation some redemption. There almost has to be some aspect of that in them as the characters have been portrayed in do deep and bright a light for them to be in the same depraved class of much of the Fire Nation's leadershpi.
In any case, I wouldn't want Zuko to simply switch sides. Besides probably being unconvincing, it would also rob the show of a dramatic aspect. Having his change of perspective or intent be subtler and more ambiguous would work to the show's advantage.
The actual mechanics of firebenders against waterbenders intrigue me. Normally waterbenders are at a disadvantage since their access to their required element is limited, but at the north pole they'll have an abundant supply of water and a seemingly creative fighting style. I suppose it could come down to whether fire vaporizes water or water quenches fire and how well the fire nation's army can withstand cold. General Winter saved Russia more than once, I should think he could be a valuable tool of the water tribe (who, I should hope, are subtler tacticians than Stalin)
Aang's capabilities after having acquired some capability with water, which I assume he will have by the time of the invasion (fleets do take some time to get from place to place, especially if they have to contend with arctic waters), pose an interesting point of speculation as well. I could see him merely switching elements as each situation demands, but it would be more interesting to see him attempt to use the elements in combination.
Another dynamic to consider is whether or not the water tribe will intercept the fire nation's fleet before it reaches the city. I would think that the waterbenders would be at a distinct advantage in any naval action.