Some additional personal observations that OP might find useful:
- Building a company is really emotional, as you already know. Most founders are under-skilled when they start, and are forced to learn quickly. As a result, you get a lot of scars along the way and the experience will test all of your insecurities. Learning how to resolve existential crises again and again is part of the package. And it gets worse. Wait until you have whole teams of smart opinionated people that you have to lead.
- It'll be good to revisit why you and your co-founder decided to start a company. You've both spent 2 years of your lives living in the trenches, so to speak. Someone decided you two were worth the risk. Why didn't your co-founder quit after the first idea failed? Why does she keep trying? I obviously don't have enough info to make any judgement calls, but I've seen situations where people make the wrong call because they've failed to truly appreciate the emotional baggage. For example, sometimes the first failure hits really hard and triggers all sorts of insecurities in a co-founder about not being good enough. And if their team starts questioning their judgement over and over without diffusing the insecurities, it just makes things worse.
- There are good and bad breakups. Good breakups are worth it for the emotional closure and the reputational upside. Bad breakups can create all sorts of fallout that will affect you in unexpected way (sometimes without you even knowing, ex. if the drama resurfaces during due-diligence). All the legal mechanics are also much smoother and drama-free when the breakup is on good terms.
- I am probably biased because these types of co-founder blowups are what keep investors up at night. Losing a technical co-founder is not only emotionally draining, but usually lethal for the investment. People problems are gnarly and take a lot of skill and precision to diffuse. If anything, use the crisis as a personal challenge to figure out how to resolve it on good terms.