That's not quite what I got.
I got that there were two people in the alley - the man in the more attractive dress and Cyrus, who was also wearing a dress. And let's examine the full set up with your fill in to see how someone could get that:
"Cyrus was stunned when he looked out from the door to his lab and saw a man wearing an even more attractive dress than the one he had on in the alley!!"
Because it ends with "he had on in the alley," and because that "he" refers back to Cyrus, the way it's written could indicate to someone that Cyrus saw himself in the alley with the other man - and both were wearing dresses. It doesn't say something like "Cyrus was stunned when he looked out from the door to his lab and saw an even more attractive dress than the one he had on and a man was wearing it in the alley!!"
