You've seen this movie before. Evil mining company wants gold ore beneath peaceful Indian village and uses the cavalry to massacre the Indians to get it. You haven't seen this movie before. The Indians are blue. The horses have wings. The cavalry fly helicopter gunships. Avatar, equal parts Star Wars, Little Big Man, Tarzan, Apocalypse Now, breaks no new ground in subject matter, plot, and character development, ... you know, the things that make a story great. Where it does break new ground is in CGI techniques. Through the use of "performance capture" cameras, the movie gives extraterrestrial humanoids the most realistic facial expressions any movie has achieved.
Are we there yet? Can we use technology to create any illusion we want on the big screen? Probably not. When less-advanced technology was used in movies like "The Polar Express" the human characters looked creepy and zombie-like. Avatar technology is undoubtedly better, but it's no coincidence that Avatar is still science fantasy and not a historical epic. Blue aliens are not human, so failings of the CGI techniques are more easily overlooked. Only when this technique is used to bring a real historical figure to the screen, one that the audience is intimately familiar with, and does it in a completely convincing manner, will we have arrived at the future of movie making. When the movie version of the life of, say, Barack Obama is made using "performance capture" and CGI instead of starring Will Smith will we know that we have arrived. Until then, see Avatar. It's the closest thing yet.