It is TOTALLY normal!! That's exactly how my ex boyfriend is with me. I went out with him, then we broke up. I miss him a lot, and he was so sweet, but then when we broke up, I knew that that was ok, and that I would probably never go out with him again, even if he did ask me out again. It wasn't a mistake going out with him though. We are still great friends, and we talk all the time. He transfered schools a couple weeks back, and it was SO weird not having him around, luckily, he transfered back, so all is well. I can NOT imagine what it would be like without him.

edit: Usually, when guys that i'm around say someone else is pretty, they sometimes feel awkward too. I just usually make a joke or laugh about it, even if it is weird, just try hard not to make it weird. Thats what i do. When i'm around guy friends, or my bf's, and I say some other guy is hot or something, i feel weird about it afterwards, but someone always jokes about it, or something, then it all feels fine.