Katara is Padmé, not Leia.

That's not Katara as Leia; that's her as Padmé. Dave Filoni was obviously Zutara.

Incest? Are you assuming that Dave Filoni shipped Kataang? As mightybuck mentioned, this was drawn before Toph was introduced. Dave probably had a different ship in mind for Katara (as did many of the writers of Avatar, from what I’ve heard).