Even if the ethnicity is blurred, it's mostly blurred Asian. Especially with the culture/clothing. And the audience perceptions are generally Asian.

The prospective cast? Not blurred at all. It's not like they got some dark skinned French Mercedes to play Katara. They got Clark Kent playing Sokka.

A friend notes that there aren't many natural roles for Asian-American actors. Here we have a whole *series* and instead they Aryan Nation the leads.

Big/round eyes, epicanthic folds:
http://en.wikipedia.org/wiki/Epicanthic_folds
http://cedarseed.deviantart.com/art/Guide-to-Human-Types-part-1-32046017
http://danbooru.donmai.us/data/6c8119998e1c18b9a67a4215afc9dc92.jpg

Aang's own eyes seem to vary between "vague fold" and "eyeballs so big there is no room for the brain".