A couple of thoughts. First Kim Un needed to do this a) to erase the embarassment of the last failure and b) to keep the military happy. He's still not in full control (whatever that will mean) and this kind of thing is exactly what the N.K. does when it wants international attention... if is the nasty 3-year old theory of internatinal negotiation and it often works.
Second, for all of the bluster, success and or failure, the NK still have a lot to overcome. For example, we do have some anti-missle technology that could limit the effectiveness of the weapon...their deploying it as a weapon would likely require we deploy the patriot/next generation of anti-missle technology as well.
Third, for all of their bluster there is nothing to indicate that they don't buy MAD. They're interested in regime consolidation and survival not suicide. Kim Un isn't an ideolog... that isn't to say he isn't one mean/nasty little piece of work... but he's been raised as a prince and it is good to be King. I'm think (and its only opinion) he'd rather be king in his own little hell than "liberate" the South if push comes to shove. In any event, MAD means that if he could sneak a missle through to our west coast or Hawaii, Japan or even the South, most of NK would be wipped of the map.
Foruth, that is where the Chinese come in. The Chinise don't want a war on their South. They don't want the U.S. lobbing missles into NK. They don't want rightest in Japan to be on the asendency and re-arming. They are going to accomodate NK to a large extent, but NK exists because of China right now... without Chiniese support the regime would be in serious, serious trouble. The Chiniese want the NK regime as it is as a buffer between it and what it sees as a U.S. puppet state in the South. They'd rather have the Kims than all of Korea as one country and one where their influence might be more marginal. So, we're not there yet, but at some point China will effectively stop NK (IMO), just not sure where that is.
There is a lot to worry about with this launch. NK has put enormous resources into making this happen and at great expense to a dangerously faulty economic system... by the same token for all of that, they continue to hang-on (in part because of China, in part because the regime has been pretty systematic and incredibly brutal about saving itself). The problem they face -- if they face it -- is that they are history's losers. The south now being one of the globe's power-house economies. That could make them rethink in the long-term. It could make them doubly dangerous.
However, in the end, to the extent possible, it is best to let them stew in their own jucies (or Juche, as it were). They can't build an effective economy doing what they're doing... only more and more grand Potemkin villages. The Chinese can tolerate a lot to keep their buffer...but they too have limits, especially if what NK does conflicts in anyway with China's effort to become the dominate Asian economic and military power...
In the end, this really doesn't change anything. Nuking NK would have been one serious option had they invaded the South with conventional forces... indeed, it was our hammer. Nuking NK is even more the option if they use a nuke or move toward using a nuke today. In some respects while they've gained more cred, they've also put themsleves in more danger. It is a risk I think they're willing to take to have a seat at the table and to score points... but it changes very little in terms of what they can get or how they're going to go forward... and, if anything, it potentially sets off an arms race with advanced countries like Japan and South Korea that could quicklly do what it has taken them years to do, more efficeintly and effectively, while all the time getting their major ally (China) more and more nervous ...