It sounds like you're emotional worn out, Kevin. If that's the case, then do what you can to take a break. A change of scenery for a week might help, if you can work out a way to do it. How about going up to Dallas and visiting Joe for a day or two?
You're a sensible and caring guy, so if what I'm about to say doesn't come out right, I hope you'll take it in the way it's intended....
Kevin, one of the first things that sprung to my mind when I read what you have written is that it sounded like you're afraid to try a relationship because so many haven't worked out. A break is good, but don't be afraid to take some risks.
Some relationships take time to develop -- you won't have that instant rapport with them, but you'll find growing over time. This is especially true with friends. The "friend zone" is good, but it can be a trap, too. If your friend is the sort that doesn't normally initiate things, then the fact that he did implies that he might be testing the water to see if you were interested in trying. If you take it slow, and both talk about why, you could try to find out if your friendship could become more.
Ultimately, you're the only one who can know what you want from life. Just don't let yourself become too comfortable with "just friends" that you don't give yourself a chance to find a "friend Mr. Right".
Good luck!
Graeme