सम्प्रयुद्धौ engaged in battle, तौ both, बलवन्नरराक्षसौ mighty human and Rakshasa, दृष्टवा to see, सर्वे all, व्याक्षिप्तहृदयैः distracted in heart, परम् supreme, विस्मयम् wonderment, आगताः experienced

Then, when the mighty human and the Rakshasa were both engaged in the battle, distracted at heart, all experienced supreme wonderment.