After 3 rounds I'm 6 strokes better than the rest of the field and 8 strokes better than my opponent in round 3, however, my opponent had a better score in round 3 by 1.
I'm assuming I'll be knocked out.
Is this normal?
Yes, this would be normal. Each bracket round is scored individually, so how well you scored in round 2 wouldn't affect how you scored/placed in round 3.