Some of that seems a little backward to me. Romantic involvements no (well not until they are qualified). But to go as far as saying you can't become friends is a little far fetched. After all you do both share one common interest - flying! And it is likely that at least some of your students will have similar personalities to yourself.
As long as you brief, fly and debrief with them in a thorough and professional manner I don't see any problem with having a beer with them after flying or going to watch the football team you both support together is any great issue.
The student should feel that there is nothing he or she can't discuss with you and you both should enjoy flying with each other. If one of you isn't enjoying flying with the other there is a problem. Distancing yourself to much from the student can I think lead them thinking you are aloof and some sort of demi god or something. And remember you are not a better pilot than any of your students, just a little bit more experienced.