Answer: Twain believes his words have incited Bixby.
The most likely meaning of the phrase "this was a red rag to the bull" is that Twain believes that his words have incited Bixby. The phrase is a reference to the Spanish tradition of bullfighting. In bullfighting, the bullfighter carries a red cloth that he waves in front of the bull. The cloth is meant to incite the animal to attack. Similarly, Twain believed his words have incited Bixby.