Definitely not. 'Azula' is a character from a particular fictional universe. Creating sexual fanfics about her is disrespectful to the original creators and the intended audience of the source material. It also goes against the values of a healthy and respectful fan community.
No. Fanfics involving sexual content are generally not appropriate, especially when it comes to underage or fictional characters in a sexual context. It violates ethical standards and can also be considered a form of inappropriate exploitation of the original work and its characters.
Such 'azula sex fanfic' is inappropriate. Fictional characters are meant to be part of a story's narrative, not the subject of sexual fantasies in this way. It can also make the fan community seem seedy and unwholesome, and may even lead to legal issues if it violates certain terms regarding the use of the character.