I feel that in many cases "I already am in a relationship" is leading the other person on. It implies that if you were not already in a relationship, you would consider their advances. Hence my mentioning of a hierarchy, it is suggested that if the current relationship ends, they'd be in the game again. This might be what you wish to convey, but if you are simply not interested in them, because you have different priorities in life &c, it''s dishonest.
Um . . . I completely disagree. Telling someone you're already in a relationship is not some weird, indirect invitation to try to get someone to cheat or break up with their partner. It does not imply anything and should be good enough as a rejection, period. For one, saying "sorry, I'm taken" shows loyalty to the person you're with; second, if you're really not into the person you're rejecting, it's a way to reject them without making it about your non-attraction to that person. Sure, maybe some people prefer brutally honest rejections, but in my experience it's better to make it as non-personal as possible to avoid hurt feelings or anger. A lot of women even pretend to be married to avoid men hitting on them because they think men will respect their (made up) husband more than the woman herself.
