My first thought is: Lance was the one talking up his form, how he was here to win, etc. Post Stage 1, he trotted out the excuses from he's almost 38, 4 years out of competition, hadn't raced in a month (conveniently forgetting his dominating performance at the Nevada City Crit), etc. I have no idea about his wattage and so I'll accept them as truthful.
As for your 'x' factor, I think what you say is entirely possible. Actually, I expect it to be the truth. Lance's feelings were hurt (he even alluded to it the day after) and he wants to show the young kid who's the Boss. But I think you are, and Lance may be as well, overlooking the 'y and z' factors: Lance has insulted Contador at every turn possible. That he's ****ed Contador off. That he now has on his hand the world's best climber and one of the best TT's motivated like no other to stomp a mudhole in his ***
. Armstrong has behaved in a way that he would have never tolerated from one of his US Postal or Disco teammates. Imagine Heras saying that he was at the Tour to win . . . but I digress.
Just based on their media comments, I'd said Armstrong is, not quite afraid, but unsure of himself vis a vis Contador. He's always proclaiming his leadership to the media or playing up the tension between the two (yet maintaining that it is mostly a media driven phenomenon). I've not heard Contador say much more than the leadership will be decided on the road--even when JB was proclaiming him leader. I just don't think Contador is intimidated by Armstrong. Of course that's just my opinion and I'm obviously partial to Contador, so take it for what it is worth.
Btw, you should check out this article by Carmichael written after Arcalis:
Given your numbers on Armstrong, you might be interested in what he had to say.