As far as the armour being recognizable, even Matt didn't recognize it on sight. The user of that armour was a legend but kept a pretty low profile.
As for the rest, they suspected he had one other companion in hiding, which would make it 3-on-2 in their favour, all of them being companions. And the military armour is not a huge factor - they presumably don't know what it is, and ordinary military armour is probably not significant protection against companions. To them it's effectively a costume. So, yeah, they're being cocky and overconfident, but expecting a 3-on-2 to go in their favour is fairly reasonable.