It looks like a cast dropout, which will be more brittle than a stamped or forged dropout. I would say that flexing the frame inwards to get better spacing could have contributed to the failure in this case due to the way the cast dropout was stressed unusually.

Like other are saying, this looks like a great opportunity to have a framebuilder melt the old dropouts out with a torch and braze in some track ends. The frame it's self is just fine; the failure is all in the dropout.