Confidence takes more time to rebuild than muscle. Be fair to yourself and don’t get frustrated it if takes a long time…that is NORMAL. Focusing on dressage is just fine. And adjusting your goals to match what is good for your horse is also good horsemanship. Get him out to other farms and lot of low key (and affordable) outings. Horses like him just need you to take baby steps in exposing them to new experiences. Sorry for the loss of the other horse…it is never easy.
I’m a year out from a broken back. I ended up needed a professional sports psychologist, and we no longer jump. Even though she broke my back on flat work, jumping would cause such huge anxiety I couldnt’ do it. So from experience, I say give yourself a break. Just walking around without a high heart rate took me a loooooong time. Hugs to you!