For someone who's confused, you've hit it spot-on. It's the same system of rationalization that he used when telling people he would have lots of parties to go to. Stephen wants to kiss Jon, so he comes up with a plausible excuse (it was the mistletoe!), and meanwhile lies to himself about his motivations (it's not gay at all!).

Jon is a little surprised. (The eyes are half-closed because, well, when something large comes at your face very fast, it's a reflex.) Not exactly delighted, but not angry, either (he won't be getting angry at anything for a few chapters yet).

Glad you're enjoying it!