Well, he hasn't actually killed the guy, right? Right now it's all talk. I've met plenty of people who talk smack, but when push comes to shove, things change.
Now, from his perspective, he thinks this guy is an a$$ ("Hello pot, my name is kettle!") and wonders if he isn't a little guilty. Grabbing a hilt and calling names, however, definitely changed the dynamic. I don't plan on Krog cutting anyone down, if that's what you're worried about ... but he might beat him with the flat of his blade if our resident gnoll-expert pushes it.
Am I coming off too strong for the drunk of a barbarian who has a self-image issue?
EDIT: Seriously, if I'm darkening the game too much, I'll lighten up if you like ...