Now that I've seen it, I don't think either you or France must be nuts
He is talking about responding to a nation or "regional power" using the tactics of terrorism on French soil. I believe that he also means that he would probably not respond with nukes unless an attack of similar nature was used against france. Clearly France would not respond to your "average" bus bombing with a nuke.
To the extent that France is ready to use nukes, I believe that US already is ready to use them. If NK sneaked a nuke into NY and detonated it, then I believe that a nuclear response would certainly be on the table.