Stupid American encountered outside a dance (8)
I believe the answer is:
meatball
'stupid american' is the definition.
(meatball can mean a stupid person in US English)
'encountered outside a dance' is the wordplay.
'encountered' becomes 'met' ('meet' can be a synonym of 'encounter').
'outside' indicates putting letters inside.
'dance' becomes 'ball' (ball is a kind of dance).
'met' placed around 'a' is 'meat'.
'meat'+'ball'='MEATBALL'
(Other definitions for meatball that I've seen before include "Small sphere of minced beef" , "Kofta, perhaps" , "Rissole of beef, pork etc" , "portion of food" , "Food made from minced beef" .)