Through the persecution the FL had put back the earrings so her appearance was once again concealed but just after the ML captured her she realized that the earrings where about to fail, she asked him to cover his eyes so he won't be able to see her but that doesn't work and she transforms in front of him.
To answer your questions he gets quite surprised when he sees her real appearance and can't believe it, a part of him is mad because he is possessive of the FL and can't stand that there was a part of her that he didn't know about and i think that other was mesmerized with her since her real appearance is gorgeous, he doesn't like the thought of someone else seeing her so he makes her cover herself on the way back to the palace.