IdreamofMcDanno

No, Steve doesn't say it casually at all. Not to other people and also not to Danny. But right here, in this scene, he's in outright in we're dating mode. Because this is just after their hiking date and just after Danny drew him a freaking I love you and a heart into the air. That's why he's all flirty, he's sure this thing with Danny is going somewhere...

(...and then it doesn't and all his dreams are instantly shattered when he finds Rachel in Danny's hospital bed three episodes later.)

I knoooow, pretty sure we've talked about this before but it doesn't hurt any less every time. Steve was so open, so hopeful, outright flirty and playful. I've said it before but it truly is Before and After 1x23, and this was in the before times when their relationship was basically a romcom with no baggage yet, and it was so easy to imagine them just getting together after every episode with not much preamble, because there hadn't been issues to resolve yet. So Steve feels confident enough to try the whole 'babe' thing out.