It roughly goes like this...

Rinoa goes to Zell 'Is this your grandfather?'
Zell says 'Yeah that's my grandfather, I look up to him more than anybody, he played a big part in the sorcereress war. He was always cool and calm in every situation.'
Squall says 'So he was the opposite of you'
Zell says 'What!! You should try to have more passion, like me!!'
Rinoa says somethin like 'I don't want to start anything but Squall don't you think you're a little too 'cool' sometimes?'
Squall says 'Im gonna have to strong arm a ho now!!' and slaps the trout outta her.

It was really funny.