But the state isn't making Bitcoin legal tender, and states don't make dollars legal tender, either.

"Legal tender" is something that can be used to pay debts and that a creditor is legally required to accept. Dollars being legal tender is something instituted by the federal government.

States, on the other hand, must accept dollars to pay state taxes (as that's legal tender), but they can also accept anything else they like in lieu of dollars (if both the state and the person paying taxes agree on this alternate payment), whether that's Bitcoins, chickens, or performances of the Thriller dance.