He's done for.
There's no coming back from having romantic fantasies where you're being tsundere and the person you love counters all your excuses by being direct with you.
And he agrees that he's p much in love with her. So, good, it seems all the love talk has actually got him thinking about himself. Has got him even questioning his attraction. It's even troubling him at school, the place where he probs has to work the hardest to pass as her. He's letting so many thoughts and feelings slip.
If he knows that both of them are in love with each other, excuses of guilt toward her can only hold for so long. That dream kinda tells me that he subconsciously gets that he's in denial about it (among other things) and that he kinda wants to be called out on it even though he's still afraid of facing it.