Exactly. You NEVER talk bad about people at work, especially people who are higher up in hierarchy, not even to your close coworkers, but especially not to strangers. Keep rumors to yourself. Be professional.

No, they completely deserve it.

He can fire them for slander though

Depending on where you are, you don't need to have a reason to fire someone, and as long as it isn't for a protected reason, you're ok.

Location says Victoria Australia, and I live there and was always told, unless you're casual, you need a reason. They can't just fire you for no reason, however, this workers ethic and the fact they just spread more rumours and gossip, show to actually being a bad employee, hence reason to fire.

9- I don't this applies as slander. Saying a person is mean isn't the same as falsely accusing them of a crime or something else disparaging.

But he probably could find another excuse to fire OP

If he had any dignity left, hopefully "I'll just grab my belongings."

It's a YDI because OP was, essentially, badmouthing and saying negative things about a higher-up they've never met TO someone they've never met. It's one thing if it's said to a coworker you've worked with for a while in confidence and can trust them to not say anything and mean it in jest. It's a completely different thing to say it to just anyone. For instance, at a previous job, my coworkers and I would talk to each other about how horrible my supervisor was but it was conversations/gossip between coworkers and we never said it around her. We also never said it to any of the seasonal employees that got hired for christmas seasons or to customers (even if they were regulars).

Saying that he heard he's an asshole is even worse. He's repeating malicious gossip about someone he's clearly never met to what he thinks is a new employee that he has no relationship with. It's not like they worked the morning together and talked about this over lunch break. This is a complete stranger he's repeating the gossip to.

Actually, he didn't say "asshole", he said "prick".

The guy wasn't baiting, he was casually sharing the info, and, honestly, OP should have known that he was the regional manager by the fact that he was a stranger.

If he referred to himself, the regional manager, in third person, suggesting that he was not the regional manager himself, then yeah, he was definitely trying to see what OP would do or say not knowing he was the regional manager. However, it's OP's own fault he stepped into it so spectacularly.