Ah so young. You initially understand that this isn’t very complicated but seem to second guess yourself.
She’s going to date someone else. It will be hard for you to watch. Not just that, anything she doesn’t get from him she’ll get from you. You’re a gap filler and it’s going to benefit his relationship with her.
Like others have said. Don’t hold your friendship hostage. Keep it short and clean. I value our friendship but I can’t watch you date someone else. Apologize and be on your way.
Dragging this out would make you out to be a doormat and a fool. You are neither. Good luck.
You would end up “exploring” things again together and youd never look at her the same since she was with someonee. Like you said, the cuddling alone would make you lose respect for her. You respect her too much for that it sounds like
Tell her what you’re telling us. Get real with her even if it means calling her out.