I think one of the things that makes Azula so amazing as a villain and a character is that her breakdown is foreshadowed by her earliest episodes. All the pieces are on the board at the very start, you just don’t realize it. So when the breakdown comes it’s all full of callbacks to earlier behavior and it suddenly feels utterly natural that this person you’ve seen as a nigh-untouchable badass mastermind is coming so undone. It doesn’t come out of nowhere, it was there all along from the very start and we simply forgot about it in the interim because she was being so badass and it had no reason to take effect just yet.
–Her speech to the captain about the tides foreshadows her banishing all her servants and advisors. The captain is totally honest with her despite being scared, that they’re not bringing the ship in just yet because of an issue with the tides. Tides are BIG deal in regards to bringing in a ship but Azula doesn’t care and simply wants her will done now and makes it clear she will harm or kill the captain if he doesn’t do the thing he knows is a bad idea. The man is not delaying for silly reasons or to hide a mistake, he is genuinely making a sound decision about how to bring a ship into port, Azula simply doesn’t care she wants what she wants done now and treats disagreement as disloyalty. Azula perceives anyone subordinate as not doing what she wants for any reason at all to be proof they’re not perfectly loyal.
–The one hair out of place with Lo and Li training her. It shows Azula as a perfectionist, and again, as a control freak. She cares about appearences, which probably ties into her status as a prodigy who has long been praised for being such. She needs to make it look effortless and perfect. But after Boiling Rock this starts to slide. In The Southern Raiders he hair comes down fully during her fight with Zuko and she doesn’t even care–hell, she can’t do anything to fix it since she needs her hand to hang onto the mountain. Then in the finale her hair is an utter disaster, showing just how far she’s fallen. Once again it fully comes down while she’s fighting, and by the time the fight is over and Katara has her restrained she’s a total mess.
–Recruiting Ty Lee. This is where we should have known from the start that Ty Lee’s loyalty to Azula is not absolute by any means. Ty Lee wanted to stay with the circus and only left because of Azula clearly threatening her by having the net set on fire. We see it again in Zuko Alone’s flashbacks, where Azula is obviously jealous of Ty Lee being able to do better gymnastics than her and bullies her for it. Ty Lee is only with Azula out of fear and always has been. Of course if it came down to Azula or Mai she’d choose Mai.
–Recruiting Mai. It’s even more subtle than with Ty Lee but they show why Mai will eventually betray Azula in the same episode Mai debuts in. When Tom-Tom, Mai’s little brother, is in danger and a hostage, Azula makes it clear she doesn’t give a shit about that and that the deal should be off Mai’s not as open as Ty Lee is so she doesn’t seem to react as much but it’s the same situation. Azula wants Mai on her team and doesn’t care what happens to people Mai probably cares about. Thing is, the person Mai cares about most is Zuko, who Azula is hunting. Mai betraying Azula for Zuko becomes more and more of a given as the show establishes Mai’s feelings for him. Meanwhile Azula probably assumed that if Mai was willing to endanger her own little brother for Azula, there would be no conflicts of loyalty regarding Zuko…and was wrong. As Mai said, she miscalculated.
It was all there right from the start of season 2.