The third season has been given the greenlight and, due to the show's popularity there is talk of a fourth but nothing is confirmed...it was originally planed as a trilogy and the creators may want to stick with that, which would probably make a fourth season created by executives which means it would probably not be anywhere near as good (can we say Gargoyles: The Goliath Chronicles boys and girls?)
I'd say Season Two will end with a big battle, similar to Season One, probably with the war balloons, with all our mains joining forces to beat them...Iroh and Zuko's knowledge of the Fire Nation could prove invaluable, if the Earth Kingdom can bring themselves to trust them.?? It would be interesting, this being the middle of the trilogy, if it follwed the example of another classic trilogy and left the fate of one of our favourites unknown (I'd go with Sokka or Iroh for that one...maybe both...captured by Azula...with Zuko being forced to team up with Aang, Katara and Toph to go after them)...