I have run into that whole 'friendship privileges' vs. 'dating privileges' thing before and I have to admit that I don't entirely grok it. To me it seems to be more of a spectrum. A given pair of people might want the relationship between them to be at different points along that spectrum. It should be OK for each to say where they want to be. I'm perfectly willing to accept a less intimate relationship with someone rather than push hir away, but I don't want to assume and guess about what they want. I've missed out on too much that way. (I expect the same consideration in the other direction, if I'm the one who wants a less intimate connection.) Either way, being honest with your friends shouldn't make them shy away from you.

(Did that make sense? It is tired, and I'm late out.)