> I'm still confused... What does this mean?
Either she's the ultimate tease, or she's testing the water. The "but..." bit is just to keep things safe in case.
Honestly, why would a person say something like that? Think about it.
When such things happen, I usually take it as a joke and swap one back. Example: "Oh, really? Man, I'm wounded. I'm so much hotter than any bro." The (attempt at) humor keeps it safe as well.
The idea is to keep giving out positive signals and encourage further advances. Flat out saying "I love you" tends to make things uncomfortable, and can sink a budding relationship.
Or maybe that's what she really thinks, but it goes counter to everything I've seen and done.