So, everyone agrees that 'showing him that you think he is number 1' was a bad idea. IIRC conflict resolution was the first thing we went over in my CHL class. But you admit yourself that it was a poor choice.
I have been threatened through my drivers window before, years ago when I lived in Hawaii - by a big old Samoan dude. It was very intimidating. If the guy wanted to hurt you, he could have broken the glass and started pummeling in a matter of seconds. And your position of being seated in the car clearly stacked the odds against you. If there was a way for you to 'ready' your weapon more discreetly - perhaps that would have been ideal. But I am not convinced that 'readying' your weapon was the wrong move at that moment - if that is indeed what happened.
Pulling out a cell phone to call 911 *at that moment* is probably not advisable either as it ties up your hands and takes your attention off of the threat.
But what I truly don't understand, is once he finally walked away, why didn't you leave?

If I were a LEO investigating the incident (or sitting on a jury) your 'in the moment' finger display would weigh in much less to me if you had left when you had the chance. Everybody make poor decisions and acts on ego from time to time. But when you are in fear for your life from someone, you generally do not choose to extend the confrontation.