Ok - there are a few nuances i think to this.
Firstly - the chap on R4 who was our diplomat there said talk of world cup embargoes "will hardly change the weather in Moscow" - we are reliant on Russian gas and over the last few years, the slump in oil prices has wrecked the Russian economy. Destabilising the middle east through supporting the only remaining Soviet era ally left in the ME (Assad) consequently did the economy good by keeping up oil prices.
It also gave them a chance to try out some new shiny kit. Which while the majority is creaking as state upthread, they have some new very effective bits of kit that certainly give Nato a headache. Namely the s400 air defence system. Putin has spent a lot of Rubles upgrading a large amount of kit. Militarily i gather they are more potent a force at projecting power than at any time in the cold war.
So when faced with an election year, a poor economy and a stack of new shiny kit - what better to give the domestic ratings a lift with international force. Appparently the domestic ratings do like a "strong man" in the old soviet style. This looks good to ordinary Russians, it gives them prestige.
Add to that a few traitors get knocked off - albeit overseas? Plays to the gallery in Moscow. (lot like Trump and his base).
So look at the recent events through the lens of domestic approval of Putin and it makes sense as far as I can ascertain.
Now - as to what we do. We shouldnt seize assets - that is how banana republics like Venezuela operate. We use the rule of law.
We will tighten sanctions, expel an diplomat, perhaps even get it condemned at the security council (I imagine that Russia will abstain!)
That will be it. Nato doesnt want to escalate and neither do the Russians.