User blog comment:FairyRaven/Fairy Tail Chapter 398: The Final Duels, Review and Commentary/@comment-1359322-20140901103237/@comment-7418318-20140901113454

I thought that his pupil changing was just the Devil Slayer's equivalent of the slit-pupils that Dragon Slayers get when they are using their magic and that he recognized Tempesta from Freed's description.

I didn't even think that Gray might have seen Tempesta's ability/identity/whatever due to his new magic until I read that here on the wiki.