I find this a very interesting episode in many ways. For one thing, the last time I've noticed that Xander displays any lack of confidence in this season is at the beginning of this episode when he's looking around the apartment. Following this episode, he's confident all season. He even seems to be dressing better (less hideous shirts).
Xander's insecurities are supposed to be a key part of his character. Yet they don't actually show that often (not any more than other characters really). It sometimes feels like they're an implied attribute, rather than a real one. Both in and out of universe. There's even an in-universe example in this episode. Scruffy Xander mentions Buffy always saving him; Willow says sometimes they all do. Ignoring the fact that the whole reason Xander is in trouble in this episode is because he saved Buffy.
What's also notable is Scruffy Xander's behaviour. This is literally the most insecure and self-doubting Xander it's possible to get. Who still refused to give up Anya and went and confronted what he thought was a demon with her by himself.
After this episode, Xander gives every impression of being filled with confidence in himself. And why shouldn't he? He's got external validation, with Anya and his job, and internal validation, from himself no less telling him he's good at stuff, and has finally moved out of his parent's basement into a rather nice apartment. Confident and mature Xander may well be the real one.
Of course, that makes season six Xander look like a pod person.
