The forest is filled with flora and fauna that remind you vaguely of underwater life, from giant sea anemones that suck their fronds back into a central trunk, to small white seeds with helicopter fronds which fly. The gelfling is attacked by a small dog-like creature, but is saved by a strange gelfling woman of the forest, who knows its secrets and can talk to the animals there. She teaches him how to ride giant striding horses, and later, to fly. She has the same high-cheekboned features he has -- though they both remind you vaguely of Michael Jackson.
It turns out that another clan of the technocratic race (we don't realize they're related until the end) is exploiting the resources of the planet by sucking "essence" out of its creatures. There's a final battle, the rule of the technocrats is over thrown (and they fly off into space), and the races of the world learn to live in harmony. So, yes, Avatar is a remake of the Dark Crystal.
I'm not saying that Avatar is exclusively based on The Dark Crystal. There is clear indebtedness to Frank Herbert's Dune as well as Tolkein's Lord of the Rings. Most important, the tie-in to video games and virtual worlds was an inspired innovation. But if the plot as well as visual production of Avatar doesn't draw heavily on Jim Henson's masterpiece, I'll eat my shorts.
This also reinforces the incredible achievement that The Dark Crystal represents. In the age of CGI, no one will ever make a movie with the complexity of Henson's using exclusively analog techniques again. It's also a testament to the imaginative work and vision that it took to realize a world that is every bit as rich and detailed as Avatar's using cloth, wood, and strings.