I happen to believe, based on past history and what appears to be pretty reliable intelligence, that they are indeed bluffing. I think they are simply applying the tactics that have paid off for them in the past. However, I'm willing to play Devil's Advocate. Let's consider both options and see if it means we (as the United States) should act any differently:
1. They are bluffing. If this is the case the current strategy is the correct one. There is no reason to reward them for threats and bullying.
2. They are honest. If this is the case, we are still employing the correct strategy, i.e. not rewarding them for terrorist threats, bullying, while preparing our forces to deal with them (along with our allies) if/when it happens.
In the end, as horrific as it may sound, our reaction should be the same. The only other option is to capitulate again and again. Past experience has shown us that North Korea does not honor its side of the bargain and continues right on track with the Nuclear Program. In short, we would be paying them tribute/ransom to "not" threaten us or our allies. The ultimate result of this appeasement priority is having them achieve their weapons goals and attack anyway (based on history). Thus, the issue is largely moot. Are there people here that would actually like to keep paying them off?