I'm honestly kind of mind boggled that Angel and Faith having sex is even a question. Apart from the canon stating clearly that they didn't have sex, there is all the little elements of this show that would have to change in order for the theory to have a legitimacy.
1. It's Angel. Him having sex is huge fecking deal. If it happens, especially with Faith, it would happen on screen. We would know about it. The fallout for Angel, emotionally, would have been huge. He would have left Buffy then and there, fully believing he was not worthy of her. It happening matters too much to too many characters for it to left to chance or ambiguity.
2. It's Faith. If she had sex with Angel there is simply no conceivable way that she is waiting until she is dying to tell Buffy. If it had happened she would have told her in Enemies, just so she could savour the look on Buffy's face. To Faith, having Angel was the ultimate triumph over Buffy, if it really happened, she would have done her victory lap right in Buffy's face.
3. The stressing in Earshot that it was kissing that Angel did with Faith, nothing more.
I'm in agreement with the other posters who said that Faith was talking about her "ride" into the darker side of herself. She had taunted Buffy that she was not ready to become her (Faith) yet. I see the line more as an acknowledgement that Buffy could have been there with Faith, in fact she very well was given their antics earlier in the season. I think it was more a taunt of how far Buffy had come in finding her own darkness.