Walcott was furious after being told Newcastle winger Milner would take the 82nd-minute penalty Walcott had won with a dazzling run.
The pair briefly wrestled for the ball before Under-21 boss Stuart Pearce gave Newcastle starlet Milner the nod to seal England's fifth qualifying win on the spin.
Psycho reckons Walcott's reaction shows he is coming of age and the legendary England defender said: "The more he comes out of himself the better.
"The way he played I am not surprised he wanted to score. I'm sure James Milner has heard worse anyway.
"He is the penalty-taker and Theo knows that. If anyone was offended I apologise but I look at the reaction as a positive. A year ago he would not have put himself up for a penalty.
"Now he feels a real part of the team. He got me off my seat all night and was a real thorn in their side."
Walcott, 18, admitted: "I was full of adrenaline and wanted to take it but I knew James would score."