I don't understand why a dealer would do this, does he think this helps his tips?

Were the Dealer's cards ever shown? The reason I ask this is that there are players who will talk trash like this. But in fact the reason they are betting that way is because they are actually trying to win the hand. Its really no different than a player who throws in a call while saying I'm donating to you. They are saying one thing (you win) while trying to win the hand (either they are on a draw or they think that you are).

If in fact his play was legimate (that is he actually wasn't just trying to make you lose more money to the third player) than merely saying that he was seems no worse than any other "trable talk" we commonly hear . . . except for the fact that he was alienanting one of his customers.