Personally, I think you'll want to tread lightly as you don't want to jeopardize your friendship. You might want to discuss it in a less emotional and heated manner than most of us normally do when approaching someone concerning extending a relationship. If you keep it lower keyed, you might be able to discuss growing the relationship without either of you feeling rejected or weird about it later.

I don't know if that will work completely, but I think it's worth pursuing as long as you can avoid things getting weird between you later.