I can understand your mixed feelings however I admire your boyfriend in being realistic about the situation. Being a stepparent is an incredibly difficult role, in addition, it is sometimes very hard for the children when a boyfriend moves in. I encourage the two of you to keep talking about this, there are many options. It sounds like there is no question about his feelings for you. I am guessing that he wants a relationship with you, but is not sure about the living together and parenting part. You should examine this too. What is best for you? What is best for your children? At some point your children will be adults. That may be a better time to live together. Teenaged children demand a lot of attention and it may be better if you are somewhat free to give them that attention. Maybe the question is when things happen in your relationship, not if. As a couple you can continue to move forward, you need to agree together how that will happen. Explore a 5 year plan, 10 year plan, if you are hoping for a life time together, taking your time now could lay a great foundation for the future.
Take this time to focus on you and your kids, get out with friends, pursue a hobby you have not been taking time for. When you start thinking about your relationship, push the pause button and refocus your thinking onto something else. Just take a break from analyzing the relationship. Make a list of other things you can think of and pull it out as needed.