attackfish

As for Iroh the elder, after he was born, Ilah and Azulon tried for a long, long time to have another child to shore up the succession, but after a string of miscarriages, and difficulty even conceiving, they ha given up trying. It was only after they had thought Ilah was too old to have children that she conceived accidentally, and Ozai was born. At first, Azulon was delighted with his son, but really, he was expecting to be having grand children by now, not another son, and Ilah died from complications from the birth, and so Iroh ended up being the one who acted as a parent to Ozai. Because of this, Iroh always feels he failed Ozai, who after all, he raised while his nationalistic sentiments were at their peak, and that he also failed Lu Ten, letting him die in an unjust war. He is terrified that he will fail Zuko, his third chance, and he isn't sure what would be worse, seeing him turn out like Ozai, or seeing him die like Lu Ten. (After much consideration, he feels dying would be worse, because Zuko could always reform himself if he turned evil).

I also think when he was younger, he was heavily influenced by Sozin's writings and believed in the nobility of the Fire Nation's conquest for similar reasons, and though as he grew older he had doubts, Lu Ten's death gave him the impetus to say "No, I have been wrong, deeply deeply wrong for years" and become the Iroh we love. Giving Sozin's writings to Zuko was hard for him, because part of him was afraid that Zuko would see in them what he had seen as a young man, instead of what he saw as a wise old man. (Of course, Zuko had been hearing propaganda of Sozin's ideology since he was little, and since his sojourn in the Earth Kingdom, he was already having doubts, so Iroh had nothing to be worried about).