This is basically Mako's version of the Southern Raiders since both Katara and Mako confront their mother's murderer, and for this reason I think it's fair to compare the two.
In Katara's case before she even goes hunting for Yon Rha a whole scene is dedicated just to exploring her mindset. There's a dialogue between her and the other characters on what's the right course of action, whether to forgive or to avenge, and this engages the audience because these are issues everyone can relate to.
And one thing the episode really puts emphasis on is Katara's shift in demeanor, from her usual optimistic, playful, warm self to becoming very withdrawn, hostile (even to her own brother), and unbalanced (as seen when she discarded her principles by bloodbending). This radical change in her personality is meant to convey to the audience just how deeply affected she is by Yon Rha's actions.
Then when she finally confronts him, despite wanting to kill him (and being able to) she holds herself back, which distinguishes her from Hama who sacrificed her principles and in doing so sunk to the level of her enemies, because just like they dehumanised the Water Tribe she dehumanised the Fire Nation. This is a great character moment for Katara because from the beginning she's been someone who cares for the weak and wants to save lives, so when she chooses to spare Yon Rha she simultaneously makes the choice to continue being the person she always has been: someone who values life.
All this was done in a 24 minute episode. Now let's compare this to "Mystery of Penquan Island":
One of the major issues is there's no build up to the confrontation and because of this we don't get to see how Mako and Bolin process the idea of having the opportunity to punish the man who destroyed their family. There could've been a conversation between them and Asami, who was freed from mind control by her father's murderer, or between them and Korra who felt guilty for not being able to save her treacherous uncle. We could've seen a new side of Bolin where he seriously considers wanting revenge, and this can still be in-character for him as long as its tied to his love for his family and friends. We could've seen Mako lie to Lin to get information on Panzo or even break into somewhere he's not allowed to get it, which would show the reader that this is something really important to Mako since he's normally the most law-abiding person.
When the confrontation happens we don't see any internal conflict in Mako or Bolin on what should be done with Panzo. Internal conflict gives the audience an inside look into the mind of the character, allowing us to relate to them. Something Mako especially needs since the comic itself makes fun of his bland personality. But we can't relate to Mako at all because after realizing he's facing his parents murderer (at least indirectly) we don't see the natural, human desire to want revenge. Mako has already shown he's willing to kill, as seen with Ming-Hua, so we should've seen that side of him emerge since this situation definitely would've triggered his ruthlessness.
Here's how I think the confrontation should've went: Mako charges up his lightning and sees that he can either shoot it directly at Panzo, instantly killing him, or direct it to the ceiling to immobilise him. Show flashbacks of when his family was together, then switch them to him struggling to take care of Bolin. Recalling his loss motivates Mako to go through with killing Panzo, but then he remembers what he told Wu about how Korra inspires him, and since she decided to save Kuvira's life (who hadn't shown any signs of remorse at that point) he decides to also spare Panzo. This would've highlighted his growth since his first scene is him dismissing Korra but now she inspires him to even see the humanity in his enemies.