Personally, I'm not too big on the idea of having an avatar be in this next game, but I'm also pretty resigned to the fact that it's an inevitability. I'm pretty sure IS is pretty satisfied with their formula that they have going, and as much as I would love to return back to the days of the Tellius games, I know that's pretty unrealistic.
That said, I think that there are definitely ways to make the idea of an avatar character work, but IS has always seemed a little too scared to go all the way and they try to find a middle ground, which ultimately makes the whole idea not work. I think that the most important thing is that if you're designing the avatar to be an empty slate to function as a self-insert character, then they can't play a huge role in the plot, because at that point they can't really be relatable anyways. This is especially true if they're royalty, because I doubt that the number of people who can empathize with such characters make up a majority of FE players. Robin actually did a pretty decent job at it for the first half of Awakening, because he was (to the player's knowledge anyways) a commoner who just happened to become a small side role in the story (I do think that reducing his role in the plot even more would've been better). Of course with the second half of the game his character became.... less than stellar. Corrin was just plain crap, as an unrelatable royal with no personality and nothing to really empathize with. But I digress......
I think there are two possible solutions to make the avatar interesting. One would be to have them be a main character but give them a three-dimensional personality just as you would any other good character, while at the same time giving them the normal customization options. The second, and I think, the best, is to reduce their role to the point at which they don't particularly impact the main plot itself while still allowing the player to imagine their own personality. Having a character that doesn't speak at all often times is much more relatable than a character who speaks but is bland. And maybe, as a side role, it would make more sense for IS to allow the player to make dialogue choices in situations like support conversations, so that they can quite literally CREATE their own avatar's personality into someone that they can wholeheartedly relate to. If they were a side character, their personality would be much more flexible and they could have a much broader moral compass than if they were the main lord.