Easy Does It Now
Kim Jong-un right now is like the drunk meathead in the bar on Saturday night, strutting around looking for a fight. There is almost nothing that can be done to defuse the situation except to leave.
The North Korean regime is, as scholars like B.R. Myers have noted, based on a certain kind of rhetoric and spin-doctoring. This is piped into society on a constant basis through DPRK propaganda channels. It really doesn't matter what the U.S. government says to North Korea: if we rebuke them strongly, Pyongyang spins it as imperialist aggression; if we stay quiet, Pyongyang spins it as Yankee cowardice.
Think of the meathead in the bar again. If you talk back to him, he wants to fight. If you look away, you're considered weak and he wants to fight. Back-and-forth exchanges are pointless and have only one outcome: his desired, pre-conceived outcome of conflict. Just leave.
What's the international/diplomatic equivalent of "leaving" in this case? Quiet strength. Washington should quietly and calmly prepare for conflict while ignoring Kim Jong-un's rhetoric. Whatever strength he has is based on that rhetoric, and by refusing to respond, we remove its persuasive power. We've already rebuked him. That's fine and justified, but once is enough. North Korea and the world know our position. Do not legitimize Kim's aggression further by responding rhetorically. He will say we're weak, but he says that already. Nothing will change. Respond strategically instead.
This will not damage U.S. prestige. Prestige is based on strength and soft power, among other things. The Pentagon seems to be following this strategy. Good. It claims to be "reducing" rhetoric, though ours was never amped up in the first place--quite moderate, in fact, which is where it should stay, as that befits a mature superpower. No, libertarians and paleocons, missile-defense systems on Guam is not "aggression"; it is quiet, efficient strength. Bear in mind, however, that another war in the Korean peninsula itself would be an absolute disaster. Thousands upon thousands would die. China could be sucked in, based on who initiates. Everybody just take a deep breath and stay calm.
Once again, remaining strong but quiet is the only conceivable option to defuse the situation. It's unclear whether Pyongyang truly wants a war. What they want, however, is immaterial, as the situation is now based on the minutiae of strategy and subtle military movements. The slightest one could tip the scales, regardless of what any leader wants. As crazy as Kim sounds, I think he's lucid enough to know that initiating conflict against the U.S., or a U.S.-backed ally, will be suicide. Then again, he knows that goading the U.S. into making a wrong move could mean that he could spin it as a U.S.-initiated conflict, thus drawing in China and starting a global agitprop war against the U.S.
That's my two cents for now.