Gonna spend this post talking about Korra again, because I've been pointlessly dwelling on the ending some more. I do not know when to let something go, that much is certain. Anyway, I've been thinking about how I would have done it if I'd wanted a similar plot and ending.
So, this whole scheme basically turns most of the season into Avatar: Legend of the Godfather 2. I'm largely okay with that, but anyway. What you'd do is start cutting in flashbacks to Aang dealing with Yakone in situations that mirror those of the Council dealing with the Equalists - you'd introduce Yakone as a character early on, and make it appear that he's only there to provide a contrast to show how Aang approached the problem effectively and how Tarrlock is being counterproductive. At first, he'd only be shown waterbending - you wouldn't get any bloodbending until a flashback just after Tarrlock first uses bloodbending on Korra. But, you still wouldn't be shown psychic bloodbending, or the trial. At this point, flashbacks to Yakone stop - instead, you have flashbacks to Amon's rise to power, each of which mirrors a Yakone flashbacks, and shows Amon acting more humanely toward his people and generally acting as you would expect a righteous crusader who genuinely cares for his followers. When Amon's ability to bloodbend is first revealed, we get a flashback of the trial of Yakone, in which psychic bloodbending is shown for the first time in the season.
From there, there are two possible directions for the plot to take. My preferred one involves no redemption for Tarrlock, but the other would also be a great improvement, I think.
The paths diverge right after Amon takes Tarrlock's bending. In one version, Tarrlock has been in cahoots with his brother the whole time. Amon never actually takes his bending, but they both act out the same scene. Tarrlock is then allowed to "escape" soon after he is taken. He feeds Korra and Tenzen the same story he did in the original, and makes clear that he was doing what he thought was best for Republic City. Realizing the error of his ways, he swears to help Tenzen overcome the Equalists. He is, of course, a mole, whose sole purpose is to act as an explanation for how Amon knows everything the Council plans in advance, and he betrays Korra (and reveals that he still has his bending) at a critical moment during a battle with Amon, probably wounding her badly enough to trigger Korra's first Avatar State. Amon manages, however, to close her chakras, using the same technique he's been using to take bending - and then we get a flashback implicitly explaining how he learned this power, possibly involving the guru who taught Aang about chakras in the first place (or somebody who looks similar and could plausibly have had the same knowledge), in which Noatok approaches as a humble student, and then later kills his teacher. The concentration this would take to do at range is presumably enough to allow Mako to get off his token lightning bolt, which is disorienting enough to prevent Amon from doing the same thing again throughout the then-standard-bending battle that ensues, in which Korra manages to overcome an initial fear about having lost her bending, realizing that she only lost the Avatar State, and proves far more important than anyone else.
I don't have time to type the second one, it turns out (short lunch break), but the basic gist involves Tarrlock suffering as a consequence of his actions toward the nonbenders of Republic City after escaping from Amon, being recaptured by the equalists, then everything goes as normal for him.
In any version, Tarrlock couldn't resist whitewashing his role in his backstory - in the former, I think he would go with his brother after that dramatic scene in which Yakone is overcome by bloodbending. In the latter, Yakone would've become increasingly violent and cruel after what happened, and ultimately Tarrlock would've killed him in self-defense, starting a whole sequence of self-loathing that winds up pushing him to become the manipulator he is, mostly out of denial of his own misdeeds and the insistence that he's going to prove to everyone that he's better than his father ever was. You get the correct version of the story during the end credits, which would be reduced in size and run at the bottom of the screen.