You might find hanging out with a new group is the way to go. I like the confrontation idea, although now my friend and I aren't as close as before. I had a friend who talked me through my ordeal. Most schools allow this as long as your parents are cool with it. I'm sure if there' s no other option and you tell your parents how you're feeling they'll let you switch.
Kids like to gossip.
People almost always welcome new friends. Blowups like this don't usually last long. If you want the rumors to stop then you have to talk to someone like a teacher or guidance counselor for help. They can talk to some of the people who know what's happening. A good way to prevent rumors is never to get involved in fights or agree with someone if they are talking behind someones back.