I'm going to pursue a girl that my friend/roommate has also expressed interest in
Why have you decided this will be okay? Why don't you just tell your friend that you're interested in her too and that you can't ignore this feeling?
I'm afraid it will turn into a competition or worst, the friendship is over.
I am pretty sure this will turn ugly. I would suggest not to step aside because you need to consider your own best interest too but at least be honest to yourself by telling your friend first. Otherwise, if he finds out by himself it will seem like you are a backstabber.
I'm just going to keep pursuing her. I don't need to tell him.
It is best to respect your friendships more than potential relationships because this will get complicated and  change your friendship.