Trev, ask yourself this question, what if you didn't say anything and this lingered for another couple of years. Isn't better to know the truth then to live in the dark? Who knows, now that she knows, maybe she may warm up to the idea in the future, you never know. Women are strange creatures. I know this may not make you feel better now, but in the long run, hopefully you will realize that you set yourself free.
trev, worry not my female deprived friend-- i was in a similar situation as yourself a mere 3 or 4 years ago. a girl i had been close friends with for years had attracted my sexual desires in ways unexplainable. i kinda made the move and got shut down slightly harshly- well not that bad- but it still hurt like a bitch. i persisted- became as close of a "friend" as i could. key to being friends is pushing boundaries- not too hard, but just hard enough that u are testing the limits of friendship. (this was my game plan). spend more time together, open up a bit in an area where u would usually be quite confined, and just generally become more comfortable. in no time (and believe me this is a tested recipe) you will be making out in your parent's basement listening to barry white..... oh sorry.... that was how my adventure went, but hey- yours may be similar! been going out with her for going on 4 years now and its been unreal. except when she calls me from work while in playing goddamn planetside!
good luck homie