He's serious. There are a few things that point to it, like how Moombas (who recognize people by the smell of their blood) call Squall "Laguna", or how Kiros later in the game says "You look a lot like your mother."
Don't forget than Kiros also comments that he doesn't look like his father (speaking for Ward, in that conversation), that Laguna has Squall's card for Triple Triad, and... the whole Ellone connection.
There is also the fact that Squall has Laguna's facial features but Raine's, his mother, eye color and hair color. Also, when you near the end of the game if you talk to Laguna in Ragnarok, he says something along the lines of, "When this is all over, I've got something to tell you."
