Thus whispering, his warm, unnerved arm Sank in her pillow. Shaded was her dream By the dusk curtains:--'twas a midnight charm Impossible to melt as iced stream: The lustrous salvers in the moonlight glam; Broad golden fringe upon the carpet lies: It seem'd he never, never could redeem From such a stedfast spell his lady's eyes; So mus'd awhile, entoil'd in woofed phantasies.
Welp, it looks like he's going to have to go with Option Number Two, because Madeline isn't waking up.
Porphyro seems well on his way to dream-world—parts of him are already "unnerved," like Madeline.
Madeline's swoon, at this point, is being made out to be a kind of adamantium barrier between her and Porphyro, and even as he sinks into her bed, her "dream"—the thing that's protecting her from him—won't "melt."
So Porphyro hangs out for a while and muses, getting caught up in his own "phantasies," or waking dreams.
"Woofed" refers to traditional weaving (the warp and the weft are the threads that make up a piece of cloth). This is the second time that Keats has used weaving language to describe the wakeful-dreaming state: when Madeline was going to sleep she was described as "perplex'd," which comes from the Latin word for "woven." Now, both kids are getting "woven" into their respective dream-states.