>>84350102She went nuts for a bit, then was dragged along to find Zuko's Mother, where she slowly went even more nuts. She tried to kill Ursa in a fit of rage once they found her, then ran off into the wilds.
Later she came back, looking a lot more sane. She now believes her purpose is to force Zuko into becoming like Ozai and herself, one who rules by force and fear. She broke out a bunch of her misanthropic friends from the loony bin and uses them as her minions, this time around.
She's also using an old legend about the Kemurikage, pretending to act as them in order to cow people with superstition.