I'm with you. I doubt this was ever intended as a satellite launch attempt. I think that was a (thin) smokescreen to appease the international community.
I think they were testing their revised first stage, working on their staging, testing their (new?) third stage, and probably checking out a re-entry vehicle design.
As you say, staging is a critical technique. They've also had problems with their first stage before. I think the third stage was new on this shot. Finally, you can test RVs on shorter range missiles, but they don't come down with the same kinetic energy - they really needed to loft one completely out of the atmosphere and re-enter at a realistic angle and velocity.
I think their "satellite" launch was a "failure" but their test (assuming they were able to collect their data) was a success. It would appear from news reports that the third stage did burn. Not sure if they got RV separation or not, nor what kind of range they were able to achieve...
I tend to agree. The profile for a ballistic missile test would be a rocket launch that goes sub-orbital, then falls into the sea. It looks like the only difference is related to their claimed purpose not to any substantive aspect of the test.