It sounds to me like you are describing the 'Rubber Sheet' view of gravity, the usual illustration being of a bowling ball sitting in a dip on a suspended rubber sheet. That mass distorts space time and a sufficient mass distorts space time sufficiently that other objects will be drawn towards it. I your example the space between the two objects may not diminish, it depends on whether either of them is massive enough that their distortion manages to affect the other.
As I understand it this model is based on Einstein's work on general relativity, though I doubt my physics is much more developed than yours.
TTFN,
WK
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