I guess I’ll chime in, mostly because I feel compelled to. Please keep in mind that your post created a very visceral reaction within me, and that any harshness in tone or language is due mostly to that. This is is no way a pitting of the OP, but it’s certainly not all sweetness and light either.
I don’t think you’re being a very good friend to this guy. This situation is the ‘nice guy’s’ nightmare. All you need now is to fall for an abusive crackhead and the scene will be complete.
It’s pretty clear that he thinks that if he hangs in there, there’s a chance. Your own actions reinforce this, whatever you might have said to him. Saying ‘we’re just friends’ while enjoying all of the benefits of a romantic relationship (w/out the sex) is a really shitty way to string someone along. Now, I could be wrong. But assuming he’s a carbon based life-form raised on this planet, I figure the odds favor my theory.
If you’re really his friend, you’ll let him go. Completely. Stop thinking about your needs and wants and consider what is fair. Neither of you can move on like this, so you need to send him away, no mixed messages, no looking back, no hanging out. That sucks, I know. But so does what’s going on now.
Also, I wonder about his relationship with your kids. Kids like order, like to know where everyone fits. What’s their take on things? If they even have the slightest idea of what’s going on, you can bet that they’ve already begun to wonder what things would be like if this guy were their dad. Something to think about as well.
Well, that was cathartic for me, at least. I hope you’ll give thought to what many of us have said here. I know that you want to trust your own instincts, but that’s not always a wise thing to do.
And no, I’d not marry anyone out of friendship alone. But my wife is my best friend and the coolest person I know, and I can’t imagine NOT falling in love with her. Maybe it’s a guy thing.