Downstairs in the courtyard, surrounded by the sort of people you get in the Winterfell courtyard, Bran announces that he's yielded Winterfell to Theon, who immediately insists on being called "Prince Theon." This show certainly has a lot of scenes where somebody insists on a higher title than they were originally called. None of the citizens are happy about this development, but Bran tells them to knuckle under. Theon says that his father, Balon Greyjoy, has donned the ancient crown of salt and iron, making him King of the Iron Islands and he also claims Winterfell by right of conquest. One guy gets mouthy, so he gets whacked upside the head. Theon tells Luwin to send a raven to his father, giving instructions for what to do. Oh, that'll go over just great. Luwin is not thrilled at the idea of doing this, but apparently a Maester takes an oath to follow the lord of the castle and Theon is currently "the lord of Winterfell." So they just do whatever the highest-ranking person in the room says? That's weird.
Osha suddenly makes an appearance and calls him "Lord Greyjoy." She says that she's a captive of the Starks, the same way he used to be. She kneels and offers her fealty, suggesting that she'd be very useful with a spear in her hand. He says no and she shuffles back to her usual place next to Bran. When Bran's shocked that his pet wildling might not be 100% loyal to him, she explains that Theon is the ocean who has come to drown Winterfell. Remember Bran's dream? It had the water coming over the walls, just like Theon's men. Well, not just like them. I'm sure if the ocean in his dream had used grappling hooks, he would have mentioned it.
A key part of Bran's dream was that Ser Rodrik was dead in the courtyard, so we'd better check off that box. And sure enough, two of Theon's goons bring Ser Rodrik through the front door of the castle. He was hard to capture, apparently. Rodrik says that Theon has "less honor than a back-alley whore" for moving against Robb Stark, who always thought of him as a brother. Theon denies that Robb is his brother, since his actual brothers were killed by Ned Stark. He basically repeats what Balon told him when he first got to Pyke. Theon says he was a hostage to Ned, not a son. His important message is, "The Seven Kingdoms are at war. And Winterfell is mine." Then Rodrik attacks him, so he gets shoved down to his knees.