As the narrator depicts it, Billy Budd is not just a man worthy of respect or even a hero; he is a man to be bowed down and worshipped, a man that you can't help but love. In the narrator's case, these feelings sometimes get sentimentalized and exaggerated, but it is clear that there is a lot of admiring going on in Billy Budd. At times, loyalty or a sense of duty merges into admiration, and at times characters try to conceal a lack of admiration by appealing to loyalty and duty.
Claggart secretly admires Billy as much as the other men, but his jealousy means that he has to hide this fact from himself. Such self-deception only fuels his hatred.
Like Claggart, the narrator envies Billy as much as he admires him. In the case of the narrator, however, he tries to conceal his envy by idealizing Billy, by using overblown terms to praise him, and by emphasizing Billy's simplicity.