The star of Two and a Half Men and Mueller both appeared in an Aspen, Colo., court for the hearing stemming from their Christmas Day fight that sent the actor to jail.
"Charlie and Brooke kissed and hugged and looked pretty happy to get beyond this hurdle,” Mueller's lawyer Yale Galanter tells PEOPLE. "They are on their way home to Los Angeles together."
"They finally got their restraining order lifted. They're finally able to communicate," adds Sheen's attorney, Richard Cummins. "You can imagine how hard it is to be married and not have any communication for some time. They're heading out to California so they can they work on their issues between them, and take care of their children and move forward with their lives."
At the hearing, Sheen, 44, was formally charged with felony menacing and two misdemeanors: third-degree assault and criminal mischief. But the judge modified a retraining order so that the couple can now be together as long as Sheen refrains from drinking alcohol, possessing guns or harassing Mueller, 32.
"Charlie is looking forward to going home and being with his children and with Brooke," says Mark Burg, Sheen's friend and Two and a Half Men producer who gave Sheen a place to live while the restraining order was in effect. "Hopefully this will all be behind him soon."
Mueller arrived in Aspen over the weekend after spending 10 days at the Two Dreams Outer Banks Drug and Alcohol Rehab Center where she “has become herself again”, her mother Moira FIore tells PEOPLE.
"We will have to see what happens down the road,” Galanter says. "But for now we are glad to move on from the holiday issues. We will see where the next few weeks takes us."
Reporting by LINDA MARX, KEN LEE and ELIZABETH LEONARD