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No clue what Todd Howard said, I'm going off of what Caddy linked from Twitter. It implies that Special Edition is only free if you own Legendary Edition or if you own the base game and then go out and buy every DLC. So, Special Edition itself will never be sold on Steam, you just buy Legendary Edition (or all your missing DLC's) and then you have it?
No. My guess is they will do it like other games where you get an additional new "Skyrim Special Edition" entry in your Steam library on October 28th, i.e. they run an ownership check and if you pass it, you get an all "new" game (so people who don't want it can still play their old vanilla game and expansions which might even be required for some mods if the authors don't update them for the special ed) .
They will, however, probably replace the Legendary with the Special Edition for new buyers from that date on, yes.
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