You've got a good ear, Dino ...
Steve uses a "chicken pick" style similar to the late, great Chet Atkins. I believe Chet used a thumb pick, while Steve uses a regular flat pick. It enables him to mix techniques throughout a song. Here's an instructional vid of him playing "The Clap", and it scares the bejeebers out of me:
http://www.youtube.com/watch?v=1KN2qvtosmM
Watching these so-called finger-style players (Michael Chapdelaine, Don Ross, etc.) is both amazing and intimidating. I love music played that way, but simply haven't been able to master the technique with any degree of expertise. There's really no way to "anchor" the hand in relation to the strings, and that gets me plucking a real mess all over the place.