The story of this film can be seen as the story of Terry's achievement of self-realization. To reach a maturity and self-awareness, Terry has to first discover what he truly values. Once he knows what he believes in, he can work to achieve some integrity.
The quote ("I'm standin' over here now. I was rattin' on myself all these years and I didn't even know it.") references Terry's development and his progress away from the false values of a thug-ruled community toward the values that he feels are true to who he is.
Terry is a moral person, defined by decency, as he discovers with some difficulty. He is not defined by loyalty to those in power.
This shift in Terry's allegiance marks him temporarily as a "stool pigeon". Those in the circle of power believe that Terry has betrayed them. The quote reveals Terry's realization that in being loyal to a group whose values are corrupt, he was betraying himself and his own chance at integrity.
We see Terry's isolation visually in the film as he is often depicted alone or chasing someone. Those in power are depicted in a group, which is often loud, assured, and dense.