Before "enchanted" was an adjective, it was a verb: to enchant. "Enchanted" is actually a participle, which means it can function as other things... including as an adjective. I don't see any problem with it being an adverb here.

This won't be the best grammar explanation ever, but here's my try: This is just one sentence, not two; the second part is a dependent clause where the new subject (the defiance) and verb (giving way) depend upon the first part to make sense. This is a common thing for me to do when writing is have a statement, then elaborate with another clause using the -ing form of a verb. You may see something like this: "I ran out the door, grabbing my keys on the way." Hopefully this makes more sense knowing that the second part isn't missing a verb. As for the use of enchanted, the way I'm reading it, it's actually functioning as an adjective, just in a way you wouldn't normally see it. Consider replacing it with other adjectives: "I stood there happy." "I stood there baffled." Enchanted isn't modifying the verb but rather the subject. At least, I think so. A second opinion would be helpful.