Diplomacy was never a serious option for North Korea. Barring a serious change of government, the only thing diplomacy accomplishes is to extract more money for the Norks to develop weapons. That's the same game as Iran.
Worse North Korea is a pipeline source for the nuclear programs of other terror states. But the only realistic option may be military. And that could mean a bloody and difficult war. It's why the trigger hasn't been pulled yet. Bush was no more eager to climb into that mess than Clinton was. He just avoided dressing it up in imaginary diplomacy. No one really wants another Korean War, but it's possible that it can't be avoided. Certainly it won't be avoided if North Korea pushes hard enough.
The X factor is the strange situation in North Korea's own government. Reading the meaning of the various killings makes for a tangled plot. China appears to have low confidence in the current regime, but it also finds it too useful to let go. Any military action would need to secure China's agreement to stay out of it. That might be doable in exchange for giving the PRC a serious role in a reunified Korea. That might not be too pleasant or palatable, but the alternatives might be worse.
Back to the X factor though, can North Korea's regime be toppled without military action. A decade ago, the idea would have been absurd. But the situation is now strange and unstable. The elites of the regime are convulsed even as ordinary people worship the ruling clan.