You cite an improvement in the mechanics of making the film but not an advance in terms of film itself. In my opinion, obviously, but this is really just a streamlined way to present things we've all already seen.
But that's mostly what we got with The Phantom Menace as well. A more efficient way to showcase tech we'd already seen (which allowed them to do it on such a bigger scale). Wouldn't you agree that Jar Jar is just the CG Yuzzum or Sy Snootles from 1997's ROTJ:SE but with much more screen time? IIRC when John Knoll and the other ILM techs were crapping themselves in TPM's "The Beginning" documentary it wasn't because Lucas was asking them to show audiences CGI visuals they'd never seen before, but rather show it to them on such a scale without a 500 million dollar budget.
I recall some knowledgable FX gurus in 1999 mentioning the Visual Effects Oscar snub against TPM and how it was an injustice not because of Jar Jar and the Battle Droids but rather all the FX innovations you
don't see (which some consider to be the best kind) like the combination of two separately filmed scenes into one shot (there's a seamless pan in the pod racer garage across multiple shots, no one would ever know that the scenes weren't originally choreographed to go together if the ILM team didn't spill the beans.)
With that note you probably won't be surprised that I agree with you that TPM absolutely trumps The Matrix in cinematic technical "importance." The Matrix is definitely a better told story than TPM but if you want to be cruel you can justifiably say that its little more than a glorified GAP commercial with guns. You don't need any further proof that "Bullet Time" was a passing gimmick than the FX of The Matrix's own sequels. Reloaded and Revolutions completely abandoned the technique in favor of all-digital versions of Bullet Time's famous "pan around slo-mo action" effect.
If you've seen The Phantom Menace and Coraline, you've already seen a version of everything Avatar can give you.
I don't doubt the Avatar technology will be widely adopted, but it's a filmmaking advance rather than a revolution for cinema, in my opinion. Of course, your mileage may vary.
And I'm not necessarily disagreeing with either of those two points. I will say that Avatar has the most amazing visuals I've ever seen in a movie bar none, but I'm not going to side in favor of how "revolutionary" it may be until I've digested more "behind the scenes" info and we see what the next few years bring us cinematically.
I just wanted to point out that I
don't necessarily believe that TPM was
more revolutionary per se. I think that what it brought to the FX table was an astonishing level of scale and volume and no doubt innovations in efficient spending to achieve said effects, but no single element really had the "wow" factor of other visual milestones (like the original Star Wars, the T-1000, Jurassic Park dinos, Gollum, Kong, or the Na'vi.)
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