Ok I've been reading through some of this thread and most of it is kind of pointless babble. I don't normally post (I just read) but I'll put my two cents in for this one...
I'll clear this up first: I've never seen Naruto, so I'm not going to even try and compare it and Avatar - as far as I'm concerned and as far as I know they are both excellent shows. And of the tv shows I do watch, Avatar does happen to be my favorite.
With that said, the question posed was: Why is this so great? The way to answer this: OPINION. What you have provided here is a list of your opinions as to why Naruto is a superior show. Fine. You may be right (again I don't personally know). But people may not agree with you.
1) You like the character development in Naruto. That's wonderful, and I can admire anyone who cares about more than just throwing punches in a show. But, the way I see it, there is character development in Avatar as well. Some people don't think Aang has had any character development - phooey. I really disliked Aang in the beginning of the show because he was busy being a goofy kid. Not anymore. Yea he still likes to have fun, but he's becoming more accepting of his position as Avatar. Zuko is another one. He goes from enemy to Aang, to angsty fugitive, to enemy to his own father. People have already mentioned Ty Lee and Mai - they both turn on their "friend" Azula for personal reasons. And based on a scene from the NYCC trailer, I think we will see Azula changing as well, although I'm assuming not to the "good side", but some sort of change (scene where she throws her brush in a mirror, with tears in her eyes).
2) You say Naruto has excellent fights, DIFFERENT from the fights shown in Avatar that you call "hit and run." This is your opinion. Maybe I like the "hit and run" fights in Avatar. The fights in the show fit the positions the characters are in: Aang is constantly running from the Fire Nation and other enemies. The fights are designed the way they are simply in order to succeed in his endeavor. To me, this does not make them any better or worse than other anime fights I have seen.
3) You may like the way Naruto's plot flows. Also a wonderful reason to appreciate a show - but I think Avatar's plot is wonderful the way it is as well. It was intended from the beginning to be split into 3 chapters. We haven't seen the end, but I'm going to assume Bryan and Mike have been successful.
4) You may like the challenges that Naruto is forced to face. Ok great. But there is more to Avatar than defeating the Fire Lord. That's a huge plot point of course - but it's far from simple. I'll point out a few reasons why: A 12 year old, last of his bending art, forced to take on all the other 3 bending forms in under a year? Come on, that's huge! The fact that their enemy Zuko joins them. Also huge. There's more, but I'm not going in to it right now. Again, my OPINION tells me this is not a simple plot and I think it fits quite well.
So I will emphasize this again - the way Avatar is designed is just different from Naruto. And to all the Avatards, all the "differences" you have pointed out is what makes it so great. All that you pointed out about Naruto, to the Narutards, is what makes it so great.
There, I'm finished. 
