Honestly maybe you should ask AI what it thinks of that line. I literally show you scenes from a movie that is similar reply in a joking manner, and neither character is misunderstanding. What you would have preferred i guess is the generic "I love you too" or "You are also beautiful Sir Tav!" (that's a non-joke). That would just be boring. Your take is unpopular for a reason that people here probably see for the first time, so why are you acting like its an obvious interpretation? No she does not sound like how you describe it, nobody thinks this. She even says "youre sweet" right after, so she appreciates it. Like how do you not see that she hides her true feelings? Not sure what youre expecting. Shadowheart is a slowburn romance - the best kind.
In that SW scene she replies "I know" to "I love you" - this is totally different. They re at such a stage of close connection that words have no meaning, only intentions. Even if she said "I hate you" it would still be an expression of love. It's totally different on a first date with Shadowheart. A first date is supposed to show that partners care about each other - that's enough. Saying "you are beautiful" is not the same as saying "you are 5 feet tall". It means "I'm telling you that you're special to me. I'm ready to open my heart and soul to let you in". If her reply to that is "I know" she's either a total moron or just indifferent to the person. So in both cases, if the guy has any self-respect and brains, he should just stand up and leave. I had to start a new game just so I could tell this pos to gtfo and continue alone.
She jumped at me in the druids' camp with "are you following me?" and got a very firm gtfo the second time. She went back to her boulder and continued sitting there alone, totally lost. I pass by this boulder often when I sell my loot, and I haven't seen anyone around telling her how she's beautiful. So what makes her so sure she's beautiful? A mirror? Right... because obviously this is exactly what a battle cleric should be like in a high fantasy setting.
The writers at Larian should stop injecting modern personality tropes into fantasy characters. Or better yet - give a wider selection of main female companions. Not every man is attracted to disrespectful bitches, you know. Minthara and Jaheira are great fantasy characters - it's just a shame they're conditional and don't have full questline.