This is a very interesting story.
I'm perfectly convinced that Sirius could have had it bad for James, and this story is a plausible depiction of that happening.
What seems a little awkward to me - and perhaps it was intentionally that way, becausehe is talking, among other things, of what Azkaban has done to him - is the connection between what has happened to his memories, and his actual memories. I find the last paragraph particularly confusing - it seems to come out of thin air. Nowhere else in the story is there any hint of their being too much in Sirius's head - more like too little.
Overall, I'd say this is a very nice job.
That was very sad! The idea of James and Sirius's relationship being so wrong at the time was really cutting, as was the thought that he had to choose Lily even if he would have liked to choose Sirius. And the idea that Azkaban took so many of Sirius's good memories of James and left him with only the bittersweet ones seems very true and was even more effective.
Two questions: you never really mentioned much about James being dead now, and I wonder if that was on purpose, like Sirius is in denial? And I wasn't really sure about how the last paragraph connected, to be honest. I'm sure it's there, but a reference earlier in the story might make it more obvious, since the skull cutting feels a bit abrupt as it is.
Otherwise I think you did a good job with this. I love pairing James/Sirius/Remus up in different ways! Yay! I did James/Remus last year, hee hee. Good luck with your next!