The show gave no indication that she's dead, but did hint at she being alive. The whole mirror thing with Azula had me thinking. Either Azula was losing it at the time she saw her mother in the mirror or maybe Zuko's mother is trapped in the Spirit World. Being that Zuko is Fire Lord, if his mother were still in the mortal world, wouldn't she have heard that he's Fire Lord and come out of where ever she's was at? Well maybe she can't because some how she's trapped. I believe this because when Azula was crying after breaking the mirror, you can see the face of her mothering looking sad. Maybe I'm looking too much into this.

Jen

Well maybe thats the case but you also have to think that if she has been in hiding for a while she might actually be really far away. Which could result in her not hearing that the war is over and that her son is now Fire Lord and that there's peace. I think that the finale didn't give that much time to actually spread the news but i'm not sure. She might be hiding in an abandoned place in the middle of nowhere where news is usually not delivered that often. Or like you said maybe she is dead and is just trapped in the spirit world. That could be a very good possibility. All i know is that i just really wanted Zuko to find her

I actually really like the "she's trapped in the spirit world" idea >.>. While it doesn't open up posibilities for a whole new series, I can see the makers writing a short side story about how it happened and how Zuko either frees her, meets her, or something of the sort.

But just an interesting note, if Zuko were to meet his mother [if she is indeed now in the spirit world] wouldn't he need Aang's help? Since generally speaking, normal people can't even look into the spirit world.

And that also arises another question, how did Azula see her mother if she's in the spirit world? Or do we just shake that off as her being deranged and half-crazy when that happened?