I thought it was a helluva fine romp. I wasn't really into the Avengers as comic-book characters, but I knew enough to have the basic backgrounds for each of them (except Hawkeye and Black Widow, who I knew about only peripherally). But I thought the movie did a good job of bringing the audience up to speed without major data-dumps, and Whedon's dialogue and camera choices are always fun. (Notice, for example, that it's Steve Rogers rather than Natasha who gets the long lingering fanservice camera-pan up the body, with particular emphasis on the butt. And a very nice butt it is, too.)

My personal favorite scene is Hulk playing ragdoll with Loki and then humphing "Puny god." So perfect.

I would suggest looking on Archive of Our Own, either by looking at things in the fandom (http://archiveofourown.org/tags/Avengers%20%28Marvel%29%20-%20All%20Media%20Types/works) or look in the bookmarks (http://archiveofourown.org/bookmarks) and then look for anything with Avengers as the fandom and a lot of kudos and/or bookmarks, which are good indicators that a lot of people have liked the fic. They're really well organized, and you can also easily search by character (ie Loki) if you want. Let me know if you want some pointers. :)

I tried to justify it to some kids in my class today who thought it sucked and The Dark Knight Rises was good. My line of reasoning boiled down to: "It's awesome and you're wrong." That got a few laughs.

The best fanfic, as others have said, is on AO3. I am not much with the reading fanfic these days but Snakeshark! is pretty much the greatest thing ever. It doesn't actually need to be Avengers fanfic, even. It's just hilarious.

Another friend just asked for fic in a locked post and got some wonderful slash recs (Tony/Steve all, I think), which I will now convey:

A Partial Dictionary of the Twenty-First Century
http://sam-storyteller.dreamwidth.org/175733.html

many names in history, none of them are ours
http://archiveofourown.org/works/426854

The Twice-Told Tale
http://archiveofourown.org/works/411599
(This was really impressive!)

Come At Me
http://archiveofourown.org/works/427806
(I haven't read this one yet, but it was the same recommender as the above three.)