What else could he do, since he was already occupying Chechnya ?
He could have nuked Chechnya (after removing the Russian troops.)
He could have razed Grozny to the ground with artillery and airstrikes.
These would have avenged the victims and sent a powerful message to the terrorists and their supporters (85%+ of the Chechnyan population)
And then he should have arrested terrorists and their supporters, and hung them publicly outside the Beslan school.