I don't really care about her dating/liking someone else. That's fine. She isn't obligated to like him romantically.
But lying to him and stringing him along is pretty scummy behavior, especially when she's just doing it out of "pity" (though a part of me wonders if she is doing it to placate him and keep him from telling the truth).
Just be honest with him about the whole situation. Like yeah he'd be sad initially but he doesn't seem like he'd hold it against her.
And yeah as
@Hollow7F I feel like she's about to throw him under the bus.