Well i agree that you should go with the first one, just because he is closer. If you like them the same amount, then the distance should probably be the deciding factor.
On not hurting them, i think its best to just be honest to Boy number 2. Say to him i'm really sorry, but you live to far away for it to work, say that you want to be friends still, throw in a load of cliches and it should be ok. Of course he'll be hurt, but you can't stop that, if he loves you like he says he'll want you to be happy and he'll accept your decision. He won't hate you.
x-Good luck-x