Don't count on the T.Sage being logical and delivering a prophesy to match the recipient's expectations/understanding. The Guy's an Old semi-senile Toad who can't remember what he was saying or names. In my opinion Naruto was premature in cutting him off leaving the sage assuming that he and Naruto were on the same page (which they still could be), but then why did Kishi craft their exchange that way?

Anyway 2 things:

1) To the Toad Sage, even Jiraiya Chan was a Young Man, and I don't see him as the type to bother making fine distinctions.
2) Sasuke could still be the villain in question, but it would take quite a dramatic turn of events for that to happen.

At this point I see little chance of Sasuke and Naruto going all out to kill one another (not impossible though).