When playing a LAN, the host skin isn't loaded, instead it appears as Alex.
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I am in 1.8-pre, I think I set the wrong version there, let me fix that. Also according to my bro, the new minecraft default skin is called Alex, and that was the skin showing.
HIS NAME... IS STEVE. (technically, it's Steve?.)
This is 1.7.10 we're talking about, download 1.8 pre-1 and see if it's fixed. You may have to enable snapshots.