This won't be the most organized post I've ever written, but I found thoughts here and there that I caught and semi-sort of organized below. I might slip into hippy-dippiness here and there, so you're warned:
I'm bothered by the maddeningly smug cluelessness of that editor's letter, and what seems like negative subtext: the way the editor compares Prime and Soul Kitchen seems to be "Prime didn't 'strike a chord,' so Prime must be worse than Soul Kitchen." I don't think the editor quite appreciates what these books do. And in trying to be positive about the "post-K" novel, the editor seems to be saying "it'll be great...if you do it my way," and I'm sorry you had to face that attitude.
And the editor makes it sound like the sales for the series have been uniformly awful -- "It hasn't done well in this market, or that one, or that one..." -- and doesn't seem to notice where sales have been good. (Did this editor work on Liquor?)
PLUS the editor's "let's have more mysteries!" tack seems to me extremely limiting, trying to fit your stories into a template you yourself said wouldn't work all the time (I remember you saying you weren't going to keep having "Rickey's in danger" endings; you knew that could turn into formula, and you pulled back from that). Vow that the phrase "together, Rickey and G-Man FIGHT CRIME!!!" will NEVER appear in your work, except as a joke.
Maybe it indeed will help at some point to do another story that's JUST your characters living their lives -- the "clip toenails and fuck and watch the NBA" sort of non-story story you've mentioned a time or two -- as one potential way to get back to the good writing space you have. Hey, supposedly Gustave Flaubert himself once said he'd find it "really beautiful... [to] write a novel about nothing." Doing that would kind of be the flip side to your "Lost Souls 2" you posted a few years ago. It might be palate-cleansing...or at least a needed "fuck you, I can do it my way" gesture.
You can always say "Life is NOT a genre." Which I think is kind of like something Neil Gaiman's said.
You might want to write something to dedicate to Stephen King! And the Lenny D. novel just might be good for that... ;-) (Also think about the multiple times that King's thought of getting out of writing and publishing; even one of the most successful writers around has had the sorts of doubts you've had.)
Remember the "eureka" moment of writing your first Rickey-and-G-man scene (on the tree grousing about losing their jobs and concocting the idea for Liquor). Writing's done that for you, at difficult times in your life. I hope you can feel that again.
Thank you very much for your honesty on a subject so close to your heart and so tough for you to discuss. That's part of what made me a dedicated reader of yours, whether in 2003 when we first "had speaks" on your old forum or 2004 when I started tiptoeing into your published work and experienced the TKO of Exquisite Corpse, Liquor and The Value of X. You're telling truth, the way you see it, with love and humor, whether you're writing about love or crotch rot.
I hope this time off from work is a positive thing for you. It does seem to be helping: you're finding things to bring you joy again, you're making a good house for you and Chef Chris and the animals, and you're continuing to get the word out about New Orleans and its recovery. And you're rebuilding your health, and that's the hugely important thing. Maybe that better health will make it easier for you to return to writing later; maybe it won't, and you'll find something else to dedicate yourself to. Maybe you've already found it. But whichever way you go from here, you have people in your corner who are rooting for you.
Keep rebuilding your happiness, Doc.