Oh no! Losing a pet is such a difficult thing to go through and having someone around to share the pain with helps so much! It's a shame you drifted apart but that happens sometimes although it doesn't mean you'll not become close again.
It would be nice to sit for a meal with her and reminisce about the good old days, her dog and of course to set the tone for the future.
Of course, you have said it all. Sitting in a round table to set things right should be the best.