While Skellig is eating, the stone-morphing occurs and he is simply fascinated by the entire process. (He is definitely staring a bit, as the stone 'softens' and is easily formed by Koshchei's hands, as if it is the most malleable clay.) So much so that he has much less of a visual reaction to what has become of the sorcerer.

"A man who harms others will reap what he sows," he comments.

Does the idea of Death being nearby bother Skellig? Not particularly. Would he have chosen a swifter method? Probably. But for the fear that he likely instilled in those princesses, trapped and set aside in their cages in the dark...did he deserve the same, suffocating, trapped darkness, no chance of escape? Possibly.