I also liked the bear conversation, which was made even funnier by the fact that we get several shots of the bear obviously enjoying itself at the party. That makes the joke even funnier I think than it would have been without the follow-up, which isn't surprising as the show has a real knack for humor. For my money, the single funniest bit on Avatar recently was Toph's whole "OH SOKKA, YOU SAVED ME! MY HERO!" bit from The Serpent's Pass.
Hey, did anybody else think "OH MY GOD, THE EARTH KING IS DEAD!" when they saw him in the dais? That'd be awfully dark for the show, but my initial reaction to seeing him was that there was a skeleton behind the curtain.