There are a number of homiletic interpretations for this pasuk. The Pardes Yosef offers an explanation which places emphasis on the need for character refinement. He interprets the pasuk to mean, “If judgment is hidden from you,” if you have difficulty in reaching a conclusion in a halachic dispute, if the halacha seems hidden from you; it is because you do not properly distinguish between “blood and blood.” You are more concerned regarding questions involving your blood and do not seem to be sensitive to the blood of others. This is the antithesis of Chazal’s dictum in the Talmud, Sanhedrin 74a, “Who is to say that your blood is redder than that of another Jew.” Why do you differentiate between yourself and others ?
Likewise, when you enter into a dispute with another Jew, why is there a marked difference “between verdict and verdict”? What you expect of others you must also demand of yourself. Do not have one standard when the verdict affects yourself and another standard when the verdict relates to another person.
Similarly, when one draws a line “between plague and plague” in order to justify his own actions, while finding fault with the activities of others, he opens himself to criticism. It is amazing how often we condemn the “plague” of others, at the same time that we overlook our own shortcomings. At times, we even go beyond the “letter of the law” and disregard the character flaws of those in our immediate inner circle. After all, it is natural to notice the negaim, deficiencies, of others and ignore nigei atzmo, our own imperfections. In the end, acceding to a lifestyle of double standard will lead to one tragic outcome — “matters of dispute in your cities.” There can never be lasting peace in a community whose members set one standard for themselves and another for everyone else.