I took it to mean that Regina will be very surprised to learn that Neal is actually Rumpelstiltskin's son and therefore Henry's grandfather. I think she only added the last part to try to get people to think that maybe Neal isn't actually Baelfire. She only confirms that Regina will be surprised by Henry's father's identity, which she will be because that means that Henry is not only connected to the Charmings but now to Rumpelstiltskin. However, she never confirms that she met Neal before, so she may have or may not have.
Even if she did meet him, he can still be Baelfire if Nealfire was able to travel between worlds like if he was Peter Pan or the White Rabbit.
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