I was looking at some screenshots of past episodes, and I noticed something.
It looks like, based on Yakone’s attire, that he was Water Tribe!

Could it be that in the past, Yakone was the Representative for the Northern Water Tibe in the United Republic of Nations/Republic City’s Council?!
Being a person with power and authority in Republic City, cements Yakone as a true threat to Republic City. He was eager for power, and almost collapsed/altered Republic City’s government from the inside out, hence the reason he was a danger to the city.

Toph uncovered Yakon’e dirty deeds and outed him to Aang. Yakone being in a position of power and authority proved to be hard to criminally pin down, and might have been a reason Yakone was not charged with anything. Just look at his face of “f^#% YES, I got away with it,” or “Just as planned.”

He was free to walk (or he escaped) which led to Aang’s outburst outside of City Hall (look at the background!).

This battle/outburst ran through the streets of Republic City. Aang went into the Avatar state against Yakone:

After Aang took care of Yakone, his seat in the council was empty. Maybe a few years later, Tarrlok took his current position after Yakone.
Now, we know that episode 8 will involve a Korra vs Tarrlok showdown. Lin Bei Fong is no longer the Chief of the police, and it seems that Tarrlok will overtake her position. From the clip released via KorraNation/Nick, we know that Team Avatar will patrol the city, and this might cause Tarrlok to go against them, as he may feel that they would get in the way of his power-hungry plans. Explains why Korra might be angry.

He arrests Korra, and the showdown begins.

Korra might have another important flashback, as we know that in episode 9, she’ll finally dive into finding out what happened in the past as a means to try and figure out what her visions are trying to tell her.