If I remember correctly, compressed gases such as nitrogen and oxygen liquify and drop to astonishingly cold temperatures. Is this the reverse nature of matter, which, when warm, expands further and further apart? What's the explanation?

You just answered your question.

Friction is heat. Friction is kinetic energy.

To get nitogen and oxygen in a liquid phase you have to compress them which results in heating (see ideal gas law) then cool them to very low temperatures to reduce the average kinetic energy of the atoms. When you heat an object you increase the kinetic energy of the atoms and molecules resulting in an expansion.