I believe it goes a little further than simply mistaking loving-kindness for compassion.
Compassion shouldn't make you sink in sadness either.
I think it could be useful for you to search a little about the "near enemies" of the four immeasurable (loving-kindness, compassion, empathetic joy and equanimity).
Grief, which is paralyzing and leads one to depression is the near enemy on compassion. They share commonalities, yet these feelings and resultant thoughts are counter productive to one's practice. If you can buy the book I recommend bellow, great. If you don't and need some texts about this to better access your situation, you can try googling for "brahma viharas" and "near enemies" or "four immeasurables" and so on. If your are not satisfied with the results, please ask and I'll try to provide some texts. Anyway, if you can get the book, it would be great. It also gives a good introduction to shamatha practice.
So here it is, from Alan Wallace: The Four Immeasurables: Cultivating a Boundless Heart
. See here:http://www.amazon.com/Four-Immeasurables-Cultivating-Boundless-Heart/dp/1559392096
Since your practice may be disturbed by this sort of emotions, perhaps you would do good by exploring this subject further.
Keep us posted if you find any trouble!