The reality is, of course, a lot messier and more unpleasant: The region is filled with people who hate each other and tend to massacre each other along ethnic lines whenever one group gets the upper hand over the others. There's a reason every World War starts there. So NATO stepped in and basically said to Serbia "If there are non-Serbs in _your_ borders, they may form breakaway republics and you must let them secede. However, in Kosovo (your former state) Serbs may not do the same thing." Serbs were basically ethnically cleansed out of Kosovo under the "protection" of NATO Kfor. There are multiple accounts of NATO forces standing a few feet away and watching as Albanians burn and loot Serbian Orthodox churches and villages.
I'm not sure what "the way out" of this is, but I think US/NATO has a responsibility to treat all the sides equally, which they don't exactly have a great track record of doing.