Well, here's an update. The other guy's insurance adjusted took his truck into the shop and they determined it was indeed brake failure. He said the line exploded (spontanious rubber combustion, I suppose), so they are going to deal with his claim and not ours. I guess it is the same as if he ran into a inanimate object.
So our insurance company is going to cover all of our bills and they have decided to total out the Jeep. Bad thing is, we will still owe $923 on the Jeep, but we shouldn't have a problem getting that rolled over into another vehicle. On the upside, since our insurance company is cover all of our medical expenses. If they succeed in their suit against the other guy's insurance company, they will also have to cover any medical expenses incurred. So that will just be money in our pocket. That is what our insurance agent said anyway.
So all in all, I think it will turn out all right. Now we just need to find another Jeep (we really liked that thing).