Don't be too concerned. This sort of thing happens all the time. Just be polite and say that you'll be pursuing other opportunities. You don't need to go into a detailed explanation of your decision if you don't want to. The interviewer may be a little bit put out but TBH that would only be the case if you were the stand out best candidate in which case you'll probably be fine if you wanted to re-apply in a year or so. As to the recruiter,just ask them to pass on your decision. They may badger you about it (they'll consider that they're losing money if you had a good chance of getting the role) but, again, you don't owe them an explanation.

As a general point, as a hiring manager, I don't tend to feel that someone's playing me unless we've actually agreed with them that they're taking a role (going as far as agreeing a start date, comp etc) and they then don't join. Fundamentally it comes down to whether or not we've stopped looking for other candidates. If we haven't stopped looking, you're not really putting us out at all.