Baller,
We're missing some information here that I'm not too clear about from your post:
- did your friend already ask her out?
- are they dating right now?
- does your friend know that you already like her?
Now, my immediate assessment of the situation is that she would much rather go out with you than your friend. She made this pretty clear by kissing you on the lips and telling you directly, so that much is obvious.
The problem could be dealing with your friend. If he's your bro and you guys are tight than it probably won't be a big deal if you simply take action before he does. It wouldn't hurt to tell him what she said, that she would rather go out with you. It'll be a bit of a let down for him, but at least you are not going behind his back.
And, why have you waited two years to do anything about this?
My rule is:
if your friends know you like a girl and you take no action to ask her out within a month, then that girl is fair game. You shouldn't be so selfish to limit your friend's options of hooking up, simply because you've been dragging your feet for a hundred years.
It's like poker, you either need to ante up or fold your cards.