It was actually cathartic for me -- not only did I realize that I may seem like the squatter to someone else in this situation, but it forced me to come to terms with the fact that I won't be working on that idea, ever.
I think this is a feeling so many people working in the web sphere have to contend with at some point.
I decided to just let it go and let my domain expire. I didnt approach the company to try and sell it, just let it expire. I wasn't squatting, amd I intended to use it, but the purpose didn't materialize, so I let it go. I never had any communication from the similarly named company; I dont even know if theyre still around. I just didnt renew when my time expired.