You did the right thing. Education is the key. Being light hearted, teaching him that knives are useful tools, not crazy assassination weapons was exactly the right thing to do. So many of us get very defensive when those poor uneducated folks freak out over our knives (or guns for that matter!). The best thing we can possibly do is show them that we are normal people (Well, that's debatable!) and turn around their ignorance.
When we first started dating, my wife had never even SEEN a real gun before she met me, and was terrified of them. After teaching her all about safety (I am crazy anal about gun safety) and educating her, she now not only shoots regularly, but LOVES the sport, and is a great shot.
I try to educate people as best I can, and if after that they STILL think I'm scary for carrying a knife or a gun....Well, F' em.