Yes, Avatar is dazzling. Make sure you see it in IMAX 3-D, as I did fortunately this weekend. It is without a doubt the trippiest movie ever made - or since the Wizard of Oz at least.
It's not perfect, though. The story thins out too much in parts, and Cameron frequently sacrifices drama for wonderment.
I was more impressed by something in the subtext - the portrayal, intentional or not, of life in a virtual world. Cameron is what Ray Kurzweil would call a Singularitarian. Kurzweil talks about the moment (in our lifetime, he thinks) when humans will essentially upload into the Matrix, and live forever. Whether you believe that or not, this is what happens in Avatar.
The protagonist is a parapalegic marine who leaves his wheelchair (and body) behind in the end to inhabit his synthetic avatar self. He uploads for good and possibly forever. It's not clear whether the aliens can transfer bodies too. If so, then they could just keep transfering every time their bodies become sick or boring. But we humans certainly have the upgrade option when we land on Pandora. All we have to do is lay down under a phosphorecent tree, and get ensarled by brightly-colored weeds. Then...snap. Our eyes open inside a bright blue 10 foot tall Eco.T.
Despite Avatar's incredible - and incredibly expensive - effects, it is sort of a rehash of this quaint old sci-fi idea. Avatar falls neatly in line with all the other VR fantasy films - from Videodrome to Lawnmower Man, Tron to (next year) Tron Legacy. But it does the finest job yet of conveying what it feels like to live in a virtual world.