I absolutely loved this movie also.
I have never seen Dances with Wolves...so I can not compare.
I love this movie because of the technology behind it. Motion Capture has been around for a little while now, but really being able to capture the human face was the tough part. Cameron has perfected this. Also...the environments and characters were already made and rendered at the time of shooting. So, when Cameron looked into the camera that he was pointing at his actors...he was seeing the Na'vi characters. Same with the camera movements. The environment was already there so all Cameron had to do is decide what movements to make as if filming a live-action movie. I thought the story line was definitely NOT original...but it was compelling none the less. I think he based the Na'vi on the Native Americans alot and did a great job of it. Yes...most of the movie is CGI but it has almost become indistinguishable from live action actors/environments. Just think of what kind of movies/video games could be created from this technology.
Long story short...go see the movie. And if at all possible...see it in 3-D. The 2-d version doesn't even compare. I know I will have to watch it in 2-D when it comes out on DVD, but it WILL NOT be the same. Like my aunt so graciously put it, "Went to see the movie Avatar on the IMAX 3 D screen. It's not a movie it's an experience!".
Thank you for your time.