You're right in backing off for a bit just to reassess the situation but I sincerely hope you remain friends after all is said and done.
I lost my best friend under similar circumstances. We were so close we could finish each other's sentences. We could spend the entire day together and never run out of things to talk about. I unfortunately was not physically attracted to him and things fell apart when I started dating my future husband. I didn't handle the situation well and ended up losing him entirely. I regret it to this day.