Istredd did think it strange Lucifer was allowing it which is probably part of why he reacted so dramatically. It wasn't just that Kyle was doing it, it was that Lucifer didn't pull away. But he raises an eyebrow when Lucifer starts to explain the whys of it.

He waits since he knows Lucifer is going to get around to it and he can feel the guilt so when he explains, he's surprised but it's not ultimately that shocking. "Let me guess, you were on edge because you thought I was dead and you couldn't find the kids so you overreacted when you thought someone was in your way." It's unfortunate. This does give some context to why Kyle seemed a little nervous around Lucifer or talking about him.

"Please tell me you didn't plan on just letting him stab you in front of everyone as an apology." Because for one, Istredd feels confident Kyle wouldn't do that, and for two, it's a ridiculous thing to allow instead of a real apology.