Steven calms, his worry being overcome with confusion and curiosity. He doesn't know anybody who is an owl, does he? He looks back at the sword, mostly because that's what the owl is doing, but then looks back to his shoulder.

"Um... I know you, right? You just don't... look like anyone I know, right now."

He's never encountered anyone who was lucid in their dreams without his provocation, so that's new. More lucid than Steven was, in fact.