Zack Davies, 26, tried to kill dentist Dr Sarandev Bhambra, 25, in revenge for the murder of Fusilier Lee Rigby.
The racially motivated attack happened in Tesco in Mold in January and earlier this month Davies was jailed for life.
Speaking for the first time since the attack, Peter Fuller, 44, said it was "like something out of a horror movie".
"I will think about what happened for the rest of my life," he said.
"That's the image I still have in my head every night - him running towards me with the machete raised and dripping blood.
"It is like something out of a horror movie."
Mr Fuller spoke out about the ordeal before accepting an award for outstanding bravery from the Pride of Britain Awards.
Mr Fuller said he heard Davies shout "remember Lee Rigby".
"Initially I just thought it was kids larking about but then as I moved about four paces I saw a man on the floor surrounded by blood and the guy standing over him and hitting with a hammer," he said.
"I decided then that there was no way I was backing away.
"There was no-one else around me, they were all running and screaming, so I moved to one side to let Mr Bhambra run past and then I moved into the middle of the aisle and made myself as big as possible.
"I started shouting at the guy that what he was doing was madness and that I was ex-Forces. I made it clear that he was either going to have to go through me or he was going to stop."
During the trial, Gareth Preston, senior prosecutor for the Crown Prosecution Service Wales, said: "Such was the level of violence involved that, were it not for the extremely courageous actions of ex-serviceman Peter Fuller, this offence could have become an act of murder."
Mr Fuller will be honoured at the Daily Mirror's Pride of Britain ceremony at London's Grosvenor House on Monday night.

Fewer than half of the country's population has internet access and those who do can often experience slow connections.
The country's premier also urged telecoms companies to cut fees, including data roaming charges.
It was not revealed how much money would be invested.
Besides the government investment, Premier Li Keqiang also urged telecoms companies to cut their prices and up their speeds, according to China's cabinet the State Council.
He also said they should cut data roaming charges for Chinese tourists, although he acknowledged that it was ultimately for the market to decide.
He did, however, announce a round of investment infrastructure improvements to the same end.
"China has more cell-phone users than any other country, but its internet service speed ranks below 80th in the world due to underdeveloped information infrastructure," the premier said, according to a release from the State Council.
He added that "speeding up the construction of information infrastructure will boost investment and support" in China, as well as helping "mass innovation".
Telecoms firms should make rapid moves to cut prices and increase urban broadband speeds by around 40%, according to Mr Li.
China's investment in broadband could benefit global network equipment makers such as Ericsson and Nokia Oyj's Alcatel-Lucent, as well as home-grown players like Huawei Technologies and ZTE.
Mr Li did not say how much investment would be needed, but officials have previously earmarked around 2tn yuan ($322bn, Â£204bn) to improve China's broadband infrastructure by 2020.
China's internet penetration rate was only 47.9% last year, with connectivity especially low in smaller cities and rural areas. This compares with about 75% of people in the United States. In the UK, 73% of households have broadband access, Ofcom said in December 2014.
The Chinese cabinet's statement added that the nation would look to open up the telecoms market and encourage increased competition, including through expanding a pilot scheme for broadband services this year.
"There is still not enough competition, which has led to telecoms fees being relatively high while there is still a lot of room to improve the quality of service," the statement said, citing an official at China's official State Information Centre.
An ex-soldier who stopped a neo-Nazi beheading a Flintshire shopper with a hammer and a machete says he is still haunted by the savage attack.
[NEXT_CONCEPT]
China is to accelerate the development of its high-speed broadband network to raise speeds but cut prices, its State Council has said.