I am a bit surprised that they included this scene in the episode.
This was my single favorite moment in the entire episode. It's pretty fucked up.
Mr Light wrote:
You mean Momo is the reincarnation of Giatsu!
I think I read somewhere that they originally planned that and later changed their minds.
It's pretty heavily implied in the episode where Momo is introduced (Ep 3, I think?), but it's more or less dropped after that point. Although, Momo is often the only one present with Aang during some of his defining moments, like in the penultimate episode on the Lion Turtle.