We have a little one foot tall avacado tree in a pot started the same way you started your's, from what I remember we left it in the water until it had some leaves and roots, the seed split but still clung on a for quite a while, but when we put it in the soil it was without the seed. So I think it's ok if the seed splits, just as long as you make sure the whole plant doesn't fall in the cup, and by the time the seed falls off completely hopefully it will be big enough to go into a pot. I'm no avacado tree growing expert but thats what we did.

Hope that helped?
Good luck to you : )