I have just been searching, and I think it has been a while since this topic has come up, so I am suggesting it again. Could we have an option, please, that is somewhere between 1. hidden to all my friends and 2. delete the one or two friends who I like but are annoying to me right now?
I get it; a lot of us play way too much Wiz as a way of dealing with challenges in real life. I try to be supportive. But sometimes, I need a break from life too. And I don't want to try to come up with long, tactful explanations to friends elsewhere while I am in battle or questing with other friends.
So my suggestion is some way to ignore, be hidden from, or provisionally delete a few people rather than the entire list. The fact that "hidden from friends" is in the options menu suggests that hidden is a global variable per character, and that probably explains why you haven't tried to do this before now. But the new "friendly" feature shows that we can be hidden to friends but not random people. This suggests that hidden to certain friends should now be possible. If the issue is in storage space for the data, then make it a very small list.
If I have to keep somebody on that list for more than a few days, I probably need to delete them anyway.
This will also solve the problem of: "I am mad at you right now, but will probably get over it by tomorrow." Permanent solutions to temporary problems can be problematic.