My best friend and I had a massive falling out 3 years ago - we didn't talk for a year, but slowly we got back in touch to the point where we went out for a drnk and had a really nice evening. Then I moved which was a pain but we still send each other the odd email and do plan to meet up again in the near future.
Not to make it sound like I fall out with all my friends but when I was at uni my best friend from school went to a different uni and he decided to go down the recreational drugs path and that not being my thing at all we lost contact, for years. Through Friends Reunited we got back in touch and were at each oither's weddings and have seen each other regularly since - just 2 weekends ago went spent the weekend with him and his wife, and their 5 month old baby.
Not really sure where I'm going with this, other than to say that even when things seem bleak there's always a way for reasonable people to get through things - friendship is a very strong force than can get over pretty much anything.
Glad you sorted things out Matt - you were brave to confront the situation, could have been much worse if you'd let it fester and grow to a more unmanageable level. Glad it's back on track now.