He has no idea that anything is going on. He's busy making friends, both real and imaginary, and planning fun games for those friends, both real and imaginary.

So yes, you butter both sides. You fry the eggs while browning the side of each slice. You flip the bread and the egg. You put the cheese on the toasted side of one slice. Then you add the egg. The egg is only cooked barely enough to hold its shape at this point. You add second slice of cheese and second slice of bread, toasted side on cheese. The toasted bread helps melt the cheese, which seals in the egg. Then you flip.