The last time it was release, the avatars were random drops only, and very few people actually got the avatars. We changed it up to match the other parties so they are more attainable. If you already have the low end avatars, you'll be working directly towards getting the high end ones with the sword collection.
Cooties will be kept and progress towards those space avatars will remain. These are for a different party series.
You'll need to collect 3000 of the item total, unless you happen to already have the low end avatars, then you just need 2000. Basically, get 1000 swords and you'll get the low end avatar right away. Once you have the low end avatar, get 2000 more swords and you'll get the high end avatar too.