Most of the time, Hiccup would have thought better about approaching a stranger. Not out of fear so much as awkwardness. He didn't worry too much about coming up against someone or something he couldn't handle here. Then again, when he started thinking like that was usually when things went wrong. That wasn't the case this time, just a general observation of the condition surrounding Hiccup's life.
For a second he almost thought better than approaching her much closer, seeing her hesitation. They could go on like he was calling out a friendly greeting and move on. She didn't completely pull back though, so neither did he. He wouldn't get any closer, was definitely too awkward to touch her without a reason either. He did take a good look at her, trying to place just what it was that seemed so different without asking outright, which seemed rude.
"Toothless? Oh, no. No! Of course not!" He waved his hands some and shook his head, reaching out to pat the dragon's side while he leaned into her touch, making that purring sort of noise Toothless often did. "He's my best friend." Everyone always seemed a little puzzled by Toothless. Tame dragons weren't a normal thing even for him until Toothless, so he understood. It didn't seem like anyone took interest in domesticating the creatures here either. Not that he thought it was necessary! Nothing ran rampant here like in Berk.
"I'm Hiccup, by the way. Do you live around here too? Our cabin's just off over that way," he motioned back the way he came from originally, trying to resist the urge to flip open his sketch book to draw her with Toothless.