Tippiechick, I don't agree with what you said about how she should do both or neither. She's already agreed to do the one in Oregon, so she should keep to her promise.
As for the wedding in Arizona, is there any way you could afford to go, if you were just a guest and didn't have to buy the bridesmaid dress? That would be the best solution, to show your friend that she is still important to you.
Keep explaining to friend #1 that it's a matter of money, not a matter of you liking friend #2 over friend #1, even if that's the case. If she stays mad at you and refuses to see how it is, then above all don't feel bad yourself! You can't do anything about it past what you've tried to do already!
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