Great question!

In the twelfth century Latin Christian attitudes to this question were rather conflicted. On the one hand you have categorical prohibitions against miscegenation and on the other you have early depictions in chronicles and popular literature where such relationships are romantic and quite beautiful.

With respect to the former, two decades after the establishment of the Crusader states and Latin Kingdom of Jerusalem the religious and secular elite of these nascent communities met at the Council of Nablus in 1120 to pass sweeping new legislation aimed at policing the sexual ethics and morals of Latin Christians and multi-confessional neighbours. According to canons 12 and 15 Christian men and women who voluntarily had sexual intercourse with Muslims would suffer mutilation; men would be castrated and women would have their noses cut of (rhinotomy).

This was motivated in part due to a recent history of military defeat, exemplified most dramatically in the annihilation of the Antiochene field army in 1119 at the Ager Sanguinis or Field of Blood. The death of Roger of Salerno on the field with the majority of his men signalled to some Latin Christian observers within the Levant that God was punishing the faithful for their moral depravity and lasciviousness with non-Christians.

However I should note that there is little evidence of the canons of the Council of Nablus being enforced, so it is uncertain whether or not local administrations had the capacity or will to enforce such laws.

Finally on the other hand we have popular literary depictions of twelfth century knighthood. One of the most famous is the Cycle of William of Orange, a collection of tales involving the eponymous protagonist who fights valiantly in a fictionalized and deeply fantastical ninth century context against the enemies of Louis the Pious (the son of Charlemagne).

In the Prise D'Orange the tale recounts how William of Orange seduces Orable, the Muslim wife of the similarly "pagan" ruler of Orange, Thiebault. This romance is made licit in the tale through her conversion to Christianity, which obviously complicates the interfaith element of your question. However the point I am making is that Muslim individuals were not necessarily seen as being a maligned other and could themselves have great internal virtue making them worthy of Christian affection. Her confessional identity does not complicate William's desire and love, and her conversion is therefore a culmination of her joining him, his house and his faith. Also the emphasis upon a dazzling and beautiful foreign princess who would willingly submit to the sexual prowess of a Christian hero should not be terribly surprising given our enduring tendency towards eroticization and orientalism.

The earliest chronicles of the First Crusade also discuss how quickly Latin Christian settlers adapted to their new cultural and religious surroundings. Fulcher of Chartres explicitly records in Book III how Catholics took non-Catholic wives and came to embrace some of the local customs and dress. Although once again even Fulcher is careful to state that those saracens who were taken as wives had nevertheless been received into the church through baptism. Whether this is true or not is another matter, although given his clerical perspective it is easy to see why such a detail would be worth emphasizing. The First Crusade: Edward Peters, The Chronicle of Fulcher of Chartres" and Other Source Materials (Philadelphia: University of Pennsylvania Press, 1972), 281.

Perhaps the canonists of Nablus were troubled by the scale of the issue but simply had no means of confronting it despite the notional authority granted by these new legislative prohibitions.