This is what Cameron said about the death scene back in the LA Times round table video series from before the Oscars:
"It was an epiphanal scene for me when I was writing the script, and when I wrote it, I actually kind of welled up myself. It's a scene at the end where the warrior that Jake has had to prove himself to, Tsu'tey, the guy that's keeping him out of the clan and the whole Na'vi experience, is dying after the battle. Jake goes to him and he hands him the baton of leadership and says, "You have to lead the people," as he's dying. Very, very powerful, emotional scene and again, the rhythm -- it just messed with the rhythm of the ending. It just felt like there was one dramatic beat too many.
It had to come out completely, and that was the one scene that we finished all the way through the [special effects] Weta process because nobody could imagine the scene not being in the movie. Nobody. All the effects people came to me and said, "I can't believe you're cutting Tsu'tey's death." They were all invested in the scene. So, I actually had it out and I put it back in. Then it got right down to the end where the final decision had to be made and I said, "No, it's coming out."
Very similar to his reasoning for cutting the intro Earth scenes. Though from its inclusion in the extended cut, I'm guessing he decided the scene itself was strong enough on its own merit to overcome it.
I'd still rather have the Earth scenes, myself. They'd add a great deal to the backstory and provide a needed contrast with Pandora. I assumed Tsu'tey was dead when he did that slow-mo tumble down into the forest.
