Summary inserted here.
He used to hear stories about her adventure with the Avatar, and if it wasn't enough, she used to insult injury to him, about her crush. Oh she never mentions it, but it was implied, and quite obvious. She used to be with him, and how childish he was. And Zuko never said a word about how he felt.
"Are you jealous" Katara asked.
And of course Zuko replied a very soft no, and he could hear a laughing Katara. She was trying to get him to admit his feelings to her. Of course, maybe he was jealous, but he didn't say otherwise.