Charlie Sheen "feels awful" about the fight he had with wife Brooke Mueller on Christmas Day -- and according to a pal, he's been reflecting on the argument this past week.

"He let himself down by drinking," Sheen's friend reveals to People magazine. "He wants to be with his kids."

Read the full affidavit from Charlie's arrest here

Mueller's lawyer announced Wednesday that the couple wants to try and "work things out" -- and Charlie feels the same. "[Charlie] has two little boys and he does not want to get divorced again," says the friend.

Charlie is in Los Angeles, waiting to get back to work on "Two and a Half Men," while Brooke remains in Aspen with the couple's young twins, Max and Bob.

Charlie's pal also attempted to explain the allegations that Sheen threatened Brooke with a knife during their heated argument. "Did he have a knife with him? Yes. It's a pocketknife that his dad gave him 22 years ago, which he always carries," the friend says. "It's not like he got a kitchen knife and went after her."

Listen to the 911 call here

During a 911 call, Brooke tells dispatchers that Charlie threatened to kill her with a knife -- an allegation he denies. He was arrested on Christmas Day on charges of second-degree assault, menacing and criminal mischief.

The couple is trying "to take a week off to cool down," but they hope to make amends, says the friend, adding, "Brooke and Charlie care for each other."