That IS Lu Ten in the picture. Zuko is the baby that Iroh is holding and Lu Ten is the child building the sand castle. Let's remember that even in World War II you didn't have to be very old to get shipped off, so it's perfectly reasonable that Lu Ten went off to war at age 10. So let's say he's about 11 there, and in the flashback where Zuko finds out that Lu Ten has died, that Zuko is approximately 9. That makes perfect sense and is entirely accurate age wise.
Yer, you’re probably right.
The thing that confused me was that all the flashbacks are from Zuko’s POV. And if Zuko is the baby, then damn, that guy has some serious memory. I just always assumed he was the kid making the sand castle.