To me, Avatar represents a point in filmmaking where other points will spin off. It doesn't have the best plot, some of the acting is merely okay, and yes, the dialogue is leaden in places. BUT! Not every movie, and certainly not every milestone in cinema has to be a fantastic film full of heart and meaning and cinema verite. Try watching Birth of a Nation, or Breathless, or or hell, even the old version of King Kong. I like all of these (okay, not Breathless or Birth of a Nation), but these are not brilliant films. But they got us thinking in new directions, new avenues of narration that led to bigger, shinier, cooler things. Things which we can point to as good films. Hell, Birth of a Nation reinvented the cinematic lexicon by using close ups and tracking shots.
What Avatar did was to represent the visual style differently, using a threadbare plot to anchor its pretty pictures. But it was a success financially. Which means people will notice it. And when they notice it, they'll go "I can fix/do that." as people often do. And the medium will continue and someone will crank out a flick that will knock us all on our asses because it'll meld the concepts that were so disparate here. Why? Because that's what happens. An idea is formed and alternately improved or devolved by others' hands until it either fades from consciousness (like the hope that someone will one day do a really good video game movie) or worms its way into the public headspace and is accepted as part of the lexicon (long, philosophical conversations between lowlife characters, un-named protagonists). Just the sheer scope, scale, and grandeur of Avatar sets it apart-- it's a big damn movie, something that has been tried by people like Michael Cimino, Werner Herzog, and David Lynch, but never pulled off as a financial success.
In the end, this marks Avatar as something that I'm glad didn't fail or fade off into the background. It's the start of something new and hopefully refreshing to the medium of storytelling. And it's also damn pretty to look at.
As a final word, what's most important to me about movies is entertainment. The main question I ask is not "was it good" or "did the film have a clear message or something to say", but was I entertained by this? It's been a good yardstick so far, and right now, I have to say, yes. Yes, I was entertained. So in my book, it worked as a film.
tl;dr - It's significant even if it's bad because of how it did what it did, but it was pretty and entertained me, so I think it was good.