I'm in a bit of an odd situation, so I'll start from the beginning.
I'm a boy in high school, and have never had anything even remotely like a girlfriend. I've never been been kissed or anything. Anyway, my best friend is a girl and for a while I only saw her as a best friend. Then last year I decided that perhaps I had some feelings for her, romantically. Anyway, I told her that, and she was really sweet about it, saying that she really didn't see me that way, saw me more like a brother, etc. I didn't mind too much, because at that time it didn't seem like it was affecting the friendship too much. However, in time I did notice that maybe some of the things she did/said were a little filtered or censored because of the whole thing.
Anyway, I liked her into this year, and then a few months ago I decided I didn't really like her romantically anymore. I again saw her only as a friend. I figured that it was just my teenage hormones making me all antsy, and since I'd never had a girlfriend I thought that maybe my hormones were forcing my brain and my heart to turn the feelings of friendship I have for my friend into something more romantic. I told her that I decided I didn't actually like her romantically anymore, and she was cool with that. In recent months I've noticed that her conversations and things have gotten more personal now that she thinks I won't be like, jealous or weird and stuff, which I like. That's all I wanted as a friend.
NOW'S where the weird part comes up. I stayed over at her house this weekend, Friday and Saturday, and I think I'm beginning to like her romantically again. I was giving her a back massage, and we got talking about sexual stuff (not involving us, but you know) and eventually she let me feel her boobs, like in an experimental fashion since it was my first foray in the physical romantic field. It was kind of awkward for the both of us, but not too much since she thought I didn't like her, and at that time I still didn't think so either.
Then on Saturday, we went to another friend's party for the Kentucky Derby (nothing like a student beer party or anything) and she, my two other good friends and I all played around in the field outside, tossing a ball and just having a good time. That was when I began to feel like maybe I kind of liked my friend again. She, one of the other friends (also a girl) and I went back to her house to chat about stuff. I was pretending to get all depressed (sorta, I like to be jokingly overdramatic) about my second friend actually having had more action with my best friend than I the last summer (considering that my best friend is bisexual, and my other friend was experimenting) and curled into a ball on the floor. I could hear both of their lips moving as they silently mouthed something to one another, and then my best friend offered to be my first kiss, just so I would know what it was like. Although I was very tempted, I denied because I want my first kiss to be something really special, not just a pity-kiss. But I was really touched that she would offer to do that even though she's professed to totally NOT like me in that way.
So my problem is this. We've been doing things that could be considered sexual if we were interested in each other, but only friendly if it's not considered that way. I want it to remain friendly, but I'm afraid that my friend will be embarrassed and weirded out and think of me as a pervert if I come out now and say that I like her. I want to be friends first, and then possibly more than that second, but I do really want to be more than friends. What's the best course of action for me to take? Confess my feelings and risk losing a friendship while I hope that she understands, or just let things slide, pretend I still don't like her romantically, and keep my feelings to myself?
I think you need to see if she honestly has feelings for you or not. Have her friend talk to her, or talk to her yourself, and see if you can get to the bottom of it. If she really doesn't like you that way... I think you two should stop the sexual things and act more like regular friends. That way, things won't become awkward, and it won't feel like either of you are leading each other on.

For once, I agree with you.
I can empathize with you: I'm in a similar position. The difference for me is that my friend got to him and asked him out before I could sort out my feelings. Because I believe strongly in a favorite phrase of my gay friend, "Chicks before dicks," the way I saw it was that the only option was to back off and stop flirting.
If I were you, I think I would listen to Jazzeh: see if you can figure out if she has feelings for you. Then you can decide where to go from there.