Is this a nightmare? I read a story of someone who had a very reasonable, strong emotional response to the error, but ultimately got credit for coming clean and republished their results with new data. (And a different conclusion.)

This is exactly how I'd expect something like this to work -- the author isn't a bad person because they made an error. The co-authors aren't bad people because they failed to catch it. Software and science are hard, mistakes are going to happen.

If anything, I think the researchers learned valuable lessons, and are better researchers as a result. They have an anecdote they can share with more junior researchers about this frightening thing that happened to them, and use that to grow more people.

We should celebrate people who take the time to handle their mistakes properly and share the lessons openly.