I think he saw the smoke monster, plain and simple.

We've seen before (when Eko saw it) that it scans the person and shows past memories. Between that and the mere fact that seeing such a creature would be an overwhelmingly awe-inspiring experience, I think Locke simply saw the smoke monster, in the same way Eko did. And I think he felt it was beautiful, in the sense that it was very raw, honest, and emotionally overpowering.