I'm not a lawyer but I would think that the having the defendant testify or not, whether in the defense all along or brought about by what happened in court is none of the judge's concern. I would think that if he punished the defense because he thought he was strung along would be grounds for appeal.
In terms of Libby's state of mind, I certainly have heard attorneys argue in closing about explanations and motives for their client's behavior, without the defendant having testified. I get the impression that the judge here so constrained the defense case that Wells now believes he has strong appeal grounds. I also think Libby is going to be convicted by this jury.
In terms of an appeal, take the judge's ruling that classified material would not be allowed in to show what Libby was dealing with at the time. The judge seems to have made comments that he earlier leaned toward letting that in because the judge thought Libby would testify. If Libby has a right not to testify, it seems to me the defense has the right to introduce evidence that indicates Libby just forgot some of this Plame stuff. After all, that is the central issue in the case.
It's kind of like you're accused of lying about a conversation you had with someone in the lobby of an office building, and the jury isn't allowed to hear that the conversation was one of a hundred you had in the WTC lobby on 9-11 right after the planes hit and during the evacuation. It's awfully relevant.