It sounds like you did well mcantar18c. I've got a buddy that runs his mouth too much when I'm around knowing that I'll have his back. It's gotten us into a couple of interesting situations but fortunately no one's been hurt.
The only thought I had was whether or not you could have made an honest attempt to retreat. It sounded like there was an opportunity to remove yourselves from the situation while the homeowner was approaching you but of course I wasn't there so I'm not going to say you did the wrong thing by allowing him to approach.