Why would the one killed be in the Fire, and will both the killer and the one killed emerge from it?

The killer and the killed are in the Hellfire if their fighting was out of tribalism [‘asabiyyah] without [valid] interpretation. The meaning of their being in the Hellfire is that they deserve it and may be punished with it, or Allah may forgive them. The hadith is evidence that whoever intends a sin and persists in that intention is sinful, even if they do not commit it. Everyone who dies upon monotheism will not abide eternally in the Hellfire, even if they enter it.