I'm in a real or perceived dilemma..

I have recently applied for a PhD position with a prospective supervisor
I really like the research area, and i am really interested in the methodology, supervisor also seems sane
a rocky start but overall it was a happy ending - supervisor was keen to accept me
for some reason my department head who doesn't know who i am, knew we paired up and thought we had chemistry

seemed like a fairytale ending

BUT THEN
straight after i agreed to take the PhD position issues surfaced

I was told that a research assistant working in the lab is taking on a PhD a few months after me
shes working on the highest profile project in the lab
shes seems extremely intimidating
im going to be my supervisors first real PhD student and it was indirectly implied that i would make the process easier for him when my supervisor supervises subsequent students
am i.. a guinea pig???? should i still take it should i leave it
am I overthinking this...

my heart says yes (passion for project, perceived compatibility with supervisor)
certain aspects of the situation makes my brain say no (50% chance im being used - although PhD students, in essence can be considered free labour, plus impeding fear)

some says yes (promising field, supervisor should need both his first phd students to succeed... right?, and obviously my supervisor will have more experienced and more capable PhD student starting after me anyway although i didn't perceive it to be THAT SOON)

should i follow passion/chemistry or LOGIC????

am i just having cold feet

need your advice

*panic attack*