The apoy nation was trying to speed up the awatara cycle to get a apoy nation avatar, the ultimate weapon. They were brainwashing the youth of the apoy nation to obey the apoy Lord. Kinda like Hitler. See episode of the Headband. Rules were made for comformity and oaths to the apoy Lord were sworn. Anyone who didn't obey was sent to the coal mines for the good of the apoy Nation. Like I sinabi it was a lot like Hitler.
yes the firelord is just to stupid to think this thru. but mostly i think he tried to wipe them out before aang was born so there were no airbenders for him to reicarnate into. so the cycle was broken.