Tony Crowe, an Apprentice Boy and local historian, says the Siege of Derry and the Relief of Derry would make a terrific film, maybe with Mel Gibson and Liam Neeson playing lead roles. "It'd be better than Braveheart. Certainly it's a great story."

Somehow, though, epic loyalist stories such as the Siege of Derry in 1688 running into August 1689, and the Battle of the Boyne the following year cannot fire the imagination of movieland. Unlike nationalist history, the adventures of loyalism are not yet politically correct.

But the Apprentice Boys are working on that. They realise there is a public relations battle to be fought if they are to take, or even share, the high moral ground with nationalism and republicanism. That new consciousness is one of the chief reasons there was relief in Derry again this week.

If Derry had gone belly-up over Saturday's Apprentice Boys parade there would have been good grounds for despair over the chances of the Belfast Agreement opening the door to peace and reconciliation in Northern Ireland. It was as serious as that.

But Derry did not yield to the forces which would prefer violent confrontation to peaceful accommodation. Much of the painstaking peace process of recent years has been about finding a sensible line between pragmatism and principle. And so it was in Derry.

There is still no guarantee that the parade will be totally peaceful. A few stupid kick-the-Pope bands or equally asinine local nationalists could stir it up on Saturday. But at least any such disturbances should be manageable, and a far cry from the trouble that was anticipated had there been no agreement.

Principle can be a subjective business. The Bogside Residents Group (BRG) led by Mr Donncha Mac Niallais insisted on principle that the Apprentice Boys must deal directly with it. The unstated alternative to such face-to-face negotiation was potential violent confrontation between thousands of loyalists and nationalists in Derry city centre on Saturday.

The Apprentice Boys, under the leadership of their governor, Mr Alistair Simpson, said on principle they would not negotiate directly, and that they had a God-given right to parade the walls with or without the say-so of the BRG, which they claim is a republican front.

Here was deadlock, which left the responsibility with the Parades Commission to make a ruling on Monday's march. As Mr Simpson said, "We didn't want the Parades Commission putting down hard and fast rules on what we were to do, which might be against both sides."

So pragmatism set in. The Boys and the BRG retreated slightly and agreed to the intensive "shuttle negotiations" over Saturday, Sunday and Monday in which there was no direct dialogue, but at least there was useful indirect negotiation.

"When people saw the terms of the accommodation they were asking me `What was the trouble all about?' But I told them it wasn't easy finding a solution. I'm 59 but I feel 159. Those talks were tiring," said Mr Simpson.

The agreement allows the local Apprentice Boys to parade the walls in the morning behind a single band, which would not play when passing the stretch overlooking the nationalist Bogside. Moreover, rather than the main parade of 10,000 Boys marching around the war memorial in the afternoon they will instead keep to one side of it.

To a less-involved mind it all seems petty, but then that is often the nature of rows during the marching season.

There was quite a degree of consensus among Apprentice Boys, Bogsiders and negotiators that compromise in Derry could act as a useful marker in resolving other disputes, such as the bitter but now token Drumcree standoff. But so far the Orange Order appears unimpressed with happenings in Derry.

There was agreement because both sides stood back, just a little. But what was particularly significant was the efforts the Apprentice Boys made to actively sell themselves as commemorating a rich and valid historical event. Unlike the Orange Order they challenged the republican propaganda machine.

Where there has been a tendency for loyalism to engage in sullen introversion (and some unionist politicians such as Mr Gregory Campbell of the DUP would acknowledge this) here was loyalism beginning to promote itself assertively and proudly, without the attendant triumphalism of which nationalists so often complain.

Last year the Apprentice Boys held a pageant at their memorial hall inside Derry's walls. This year they went further by staging the Maiden City Festival to highlight the Protestant contribution to the development of Derry.

Financially supported by the nationalist-dominated Derry City Council the festival is running currently and involves drama, art, exhibitions, poetry and pageant.

People like Mr Crowe and Mr Simpson, whose personable, affable personality was an important factor in the sides reaching accommodation, are enthusiastic about the project.

"Look, local Roman Catholics were telling us, `You are sitting on a goldmine, you should be using it for the good of the city'. And that is what we are trying to do," said Mr Simpson.

"The Siege and Relief of Derry is a great story," agreed Mr Crowe. "It's about deliverance, endurance, sacrifice and betrayal. We are trying to get that across to the wider community, and I think we are beginning to succeed."

Still, this agreement will not dispel the cross-community tensions in Derry, with nationalists mainly living in the west bank of the city, and Protestants, apart from a small community in the Fountain area, mainly living across the bridge in the Waterside. Nationalists and Protestants are becoming wary of straying "into the wrong area".

Over the 30 years of the Troubles, said Mr Simpson, 20,000 Protestants moved from the west bank to the Waterside or even further to the east. Protestants living on the Waterside tend to shop in Coleraine or Limavady, rather than travel a few hundred yards across Craigavon Bridge into the city centre.

Protestants, said Mr Crowe, often feared coming into the city centre. Young Protestants were afraid to socialise in the Cityside. "There is a real sense of Protestants always looking over their shoulder when on the west side," he said.

Mr Simpson and Mr Crowe say that now the parade dispute is resolved the city must start devising ways of breaking down the sectarian tensions and ensuring that everyone can feel comfortable in the city, whether on the east or west bank.

"That is why it is so important that the issue of Protestant alienation should be seriously addressed," said Mr Crowe. The Shared City Forum, under the chairmanship of a former SDLP mayor of Derry, Mr Martin Bradley, who has impressed unionists with his willingness to find compromise, provides the machinery for the Protestant sense of disaffection to be tackled.

The forum has agreed to deal with the issue in the coming months. "This isn't just about parades. We want people to recognise the validity of Protestant alienation. This isn't an issue of people getting up on their high horses and making unreasonable demands. There appears to be a willingness in the city to address the matter, and we are gratified by that," said Mr Crowe.