I agree that this is a hard episode to watch. When I saw it the first time it actually wasn't as impacting as when I rewatched it -- seeing it again made me realise how sad it actually is. I think it's actually one of the saddest entries in the series, mainly because, as you mentioned, it's Appa suffering from start to finish, and just when we are finally given a precious gleam of light, the hope of a reunion between Aang and Appa after so many episodes of waiting and so much emotional turmoil...Appa is foiled yet again. So frustrating.

When I look back on these season two episodes, they seem to feature so much more serious and emotionally impacting moments than I remember from season one...it's my favourite season in the series, but episodes like this are still ones which I'd rather not rewatch, due to the suffering the character goes through. I think Appa has always felt like a real character, an irreplaceable part of the gang (rather than the usual depiction of a dull animal only used for transportation) and this episode really hammers that home.