Hi Liz - A friendly word of warning about the 'we will continue to date...' scenario. That tended to be my approach when I wanted out of a relationship, and I can't say it worked very well - especially when we had previously been so close. For me, I think it was a way to avoid - or at least postpone - taking that final step of really breaking it off. What ended up happening was that we either ended up fighting and generating a lot of bad feelings because one or the other was hurt or jealous when the other person did actually date someone else, OR we ended up getting back together and were right back where we started in a bad relationship. I was never brave enough to just make that clean break right up front - either fear of being completely on my own, or fear of hurting the other person. But in a way, all I really did was prolong the problem.
Given your boyfriend's psychological problems, he may not be able to deal very well with the reality of your dating someone else. I'm sure you are trying to make this separation a bit less painful for him, but in the long run it might end up being worse for him. Unless you really, really feel - deep, deep down in your true heart - that you want to be with this person for the long term, I would suggest that you break it off cleanly now.
Wish I could have followed my own advice!