Fiction can be a tough business, whether it's for the author, the agent, or the publisher. Agents and publishers know that blockbusters are very few, and that even a break-even book can be hard to achieve. So they have to think very carefully before taking on an author, even if they like the book.
Are you saying that your small-publishing friend wants to take on your book? That could be worth it for you, as it gives you a partner who can get the design and printing done, and who has access to distribution channels. As far as marketing, even agents and large publishers are going to expect you to be a self-marketer. That just goes with the territory these days.
As far as going the independent route (I use the term independent publishing, rather than self-publishing), many authors have been successful that way. You just have to be prepared to handle all costs yourself -- editing, design, setting up distribution channels, advertising costs, and so on. On the positive side, your royalty percentage is a whole lot larger! Another positive is that publishing independently might give you an opportunity to engage more closely with your readers.
I'm sure you've done the research to find out how to develop and market your book, but I do know of a good fiction editor, and a marketing person who has developed a useful strategy for building an author's marketing platform. If those things are of interest, you can private-message me.
Anyway, sounds like a great project. And I agree you shouldn't worry about being on the "right side." I assume you're telling a story, not promoting an ideology.
Roy B.