I'm reading in Focus (a UK science magazine) about the physics of re-entry.
All the energy is dissipated as heat. A returning spacecraft does not get hot through friction with the atmosphere. A layer of air builds up around it and between the layer and the surrounding atmosphere is a shockwave, where the heat is generated.
Early Mercury capsules were in some ways much safer because they descended more steeply than the Shuttle and thus not much of the heat ended up in the heatshield. The blunter the capsule and the faster it moves,the farther away the shockwave occurs. Most of the heat of the Mercury capsule was swept away into the atmosphere. Max Faget wanted the Orbiter to re-enter like a Mercury capsule, with its nose held high. The US Air Force insisted on a flyable spaceplane, with a slower re-entry, the nose no higher than 40 degrees to the horizontal. As a result, the Shuttle would be subjected to 4 times as much heat for twice as long.

Raoul