The Willie Mullins-trained superstar is a best-priced 9/4 favourite with Sky Bet to regain the Champion Hurdle crown, which he claimed in 2015, with Henderson's reigning champion Buveur D'Air next best at 7/2 for the Cheltenham feature.
Henderson said: "Watching Faugheen the other day was fairly scary, I must admit.
"I watched it with JP (McManus) and we just looked at each other. He (Faugheen) was frighteningly impressive."
Buveur D'Air warmed up for his intended reappearance in the Fighting Fifth Hurdle at Newcastle on Saturday week with a racecourse gallop at Newbury on Tuesday morning.
The six-year-old was joined by stablemates Divin Bere and Charli Parcs, with the latter being aimed towards Newbury's Ladbrokes Intermediate Hurdle - registered as the Gerry Feilden.
The Seven Barrows handler added: "I was pleased with that. He (Buveur D'Air) is big now and carries plenty of weight. There is a long way to go and he has done a hell of a lot of work already. It was just what we wanted to do with him. He would not be as wound up as he would be for the Champion Hurdle.
"We are not racing but they went a good gallop and it was a good bit of work, so it was all good."
Looking ahead to a potential clash with Faugheen, Henderson said: "He (Faugheen) will go on his route and we will go on ours. I don't where he will go and when we will meet.
"You would like to think that will be in March (at Cheltenham). You don't want to be slamming hell out of each other practising. We've all got to get there. Willie knows that as well as I do. We all know there will elephant traps all over the place to catch the fallers. Everything has to go 100 per cent all the way.
"We will have to sharpen our pencil a bit, but the pencil is getting sharper."
Another potential clash between Henderson and Mullins-trained superstars that promises to set pulses racing is Altior versus Douvan in the Queen Mother Champion Chase at Cheltenham next March.
Altior was last week ruled out of an intended reappearance in the Tingle Creek at Sandown by Henderson due to a wind problem, which has since been operated on.
Henderson said: "You would like to think Altior and Douvan will meet in March because that is where it really counts. Hopefully he (Altior) will be there to say hello to Douvan. It (operation) all went 100 per cent and he is back in his box doing fine."
Asked whether he felt Altior would have a prep run before the Festival, Henderson added: "That's what we want to do but that is too far away to say if we can or we can't as we have got to sit still for another three weeks."
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