Summary: They can no longer ever be.
Arnold had always thought that Iggy was cool and popular. Whenever Iggy wanted to spend time with him, he couldn't help but feel giddy. For his part Iggy always thought that Arnold was cool. The way the other boy was always there with a helping hand, the fact that Arnold was always so genuinely nice warmed his heart. When compared to others, how could Iggy not want to spend time with him over the rest?
Their friendship grows and then the secret is discovered. Iggy can only feel mortification and horror as Arnold's beholds him in his bunny pajamas and while for his part Arnold can't help but find it funny, he also finds it endearing. His vow of silence reassures Iggy and in their hearts their friendship feels stronger than ever. Their hearts beat in a sense of excitement of sharing such as secret, of the level of guaranteed trust; it's truly a pity that neither boy considered that other people would discover the secret on their own.
When Sid and Stinky deduce Iggy's secret Arnold is mortified, when they share it around the school both boys are horrified. Under the horror bleeding through Iggy's body is the the burning churning flame of betrayal. For Arnold alone discovered his secret, how else could the secret have gotten out to the entire school? Iggy is simply too angry, his heart shattered, to listen to Arnold. Arnold is too fear driven, his heart quivering in fear at the idea of Iggy hating him to give Sid and Stinky any thought.
Then it comes, the loathing, the desperation to not be hated, and the ultimatum. The bitter knowledge that Iggy discovers the truth only after Arnold has undergone such humiliation.
When the dust settles Arnold can only feel endless anger and rage towards himself. The idea that he could be so desperate to be liked, to be respected, the thought that he would be so horrified at someone believing he hurt them on purpose, that distraught over someone being mad at him that he put himself through such humiliation.
For his part Iggy can feel himself become lost, his heart breaking at what he forced Arnold to do, all in order to earn something that Arnold never should never have been forced to earn in the first place. He can see the anger, the naked despair, burn within Arnold's eyes and the sudden terror gripes his heart. The terror that he has finally done what not even Helga could do; cross the seemingly endless line of what Arnold can forgive.
Arnold is fundamentally disgusted by his own actions, and endless angry against Iggy for being so unreasonable, for not listening. Iggy is consumed with regret and sorrow, regret that he was too prideful to listen, sorrowful that he threw away something as precious as Arnold's friendship all because he was unwilling to listen.
Their unaware crushes die one a painful death from the storm of rage and the other from a tidal wave of endless sorrow.
When the boys look back at it, they can only feel the surge of anger and horror at themselves. The mourning of a friendship lost, one that may never recover. They are too young to recognize the signs, too fearful of admitting what they had begun to feel.
They are simply too ignorant to recognize the tragedy and the end of something that they could have been, but now can no longer ever be.
Author's Note: I honestly feel that Arnold having a crush on Iggy makes his decision to go as far as he did a more well answered reason than wanting to preserve a friendship.