This is an oddly constructed issue in terms of plot, but it still manages to do its job by introducing a classic 1940s superhero into modern continuity AND telling a slam-bang action tale.
It starts with Namor, forced to retreat from the Avengers at the end of the last issue, throwing a temper tantrum. When he sees some primitive eskimos worshipping a human figure encased in ice, he throws the idol into the ocean.
The Avengers, returning to the U.S. in a submarine, happen by just as the ice melts. They recover the figure that was frozen inside. This, of course, turns out to be Captain America, frozen in suspended animation ever since an explosion during World War II threw him into the freezing Arctic waters and killed his partner Bucky.
And it's a darn good thing they found Cap, because when they get back to New York City, a mysterious ray turns the other Avengers into statues. With the help of Rick Jones (who looks just like Bucky), Cap figures out that the attacker is a long-lived alien who crashed on Earth centuries before and became the basis for the legend of Medusa. The alien was hired by Namor to take vengence on the Avengers.
Anyway, Cap captures the alien and gets him to turn the Avengers into humans again. Then the group sets out to recover the alien's ship from it's undersea crash site (near a remote island) and let the poor guy finally get home.
Namor, in the meantime, has been found by members of his elite Atlantean guard, who remain loyal to him even with after the other Atlanteans have deserted him. He and his guards attack the Avengers when they're on the island. This leads to yet another fun, well-choreographed fight scene. Once again, each member of the Avengers is given a few panels of individual awesomeness as they battle Namor to a draw. The alien, in the meantime, manages to lift off and escape Earth.
The issue ends with Rick Jones wondering how the Hulk will take the news that he (Rick) has been asked to be Captain America's new partner. That, in fact, will have repercussions--though not within the pages of The Avengers.
A few details of note: Captain America only vaguely remembers Namor's name and Namor doesn't know who Cap is at all. But this detail will be ignored in later stories, especially in the 1970s series The Invaders, when we learn the two actually fought along side each other against the Nazis quite often.
There's no mention of the post-World War Captain America stories that appeared in the late 1940s and early 1950s. For a long time, these would simply be ignored. Eventually, there would be a retcon telling us that the later Cap and Bucky were replacements who just didn't work out in the long run.
Finally, the Nazi agent responsible for killing Bucky and tossing Cap into the Arctic is only a silh0uetted figure in this issue. We'll eventually find out this was Baron Zemo, a character who will appear for the first time in Avengers #6.
Magneto returns, bringing his newly formed "Brotherhood of Evil Mutants" along with him. There's the fast and agile Toad, Mastermind (who can create hypnotic illusions), and siblings Quicksilver (super-speed) and Scarlet Witch (who has a power that would eventually be defined as probablity control--making unlikely things happen).
This is a great issue on two levels. First, the action scenes are consistently excellent. Both the Danger Room sequence at the beginning and the X-Men's climatic invasion of a castle controlled by the Brotherhood are fun and exciting.
Then there's the characterizations. There's a telepathic confrontation between Professor X and Magneto that defines the two men's polar opposite positions on how to deal with the normal human race. Then there's Quicksilver and the Witch--loyal to each other as brother and sister and with a real concern for issues of right and wrong, but loyal to Magneto as well because he rescued the Witch from a bloodthirsty mob in Eastern Europe. (Eventually, after a retcon or two, we'd find out that Magneto is actually their dad.) They share Magneto's suspicion of Homo Sapians, but still value individual lives.
This leads to a cool ending to the X-Men/Brotherhood fight. The bad guys are in retreat, but Magneto has left behind a ticking nuke. Concerned about the loss of innocent life this would cause, Quicksilver dashes back to defuse the bomb in the nick of time. But then, still distrustful of humanity, he runs back to Magneto.
It's a great character dynamic that will lead to Quicksilver and the Scarlet Witch eventually leaving the Brotherhood and becoming long-serving members of the Avengers. But for the time being, they'll remain sort-of bad guys.
One other important plot twist to mention: Caught in an earlier, non-nuclear explosion, Professor X seems to have lost his mental powers. That will have consequences in later issues, of course.
That's it for March. In April, Ben Grimm will take on the Hulk in what is one of the best comic book fights ever (with it all leading up to an FF-Avengers team-up); Spider Man confronts Dr. Octopus once again; Johnny Storm is told by the cops that he can't flame on within New York City limits; Dr. Strange has another inter-dimensional adventure; Thor adds a couple of nasty Asgardians to his rogue's gallery; Iron Man meets a pretty Russian spy who will one day defect to our side; and Giant Man takes on a South American dictator.
Oh, yes--and a certain blind but fearless hero joins the Marvel Pantheon.