I don't think Putin will use nukes.
For what it's worth, it does appear that Russia has tried to avoid inflicting heavy civilian casualties. There has been no carpet bombing of Kiev for instance.
I think it is more like Putin is an old man who is living in the past and he is surrounded by other old men living in the past, who fondly remember when Ukraine and Russia were united. They don't realise that most of the young men fighting them were born after the USSR fell, and that it is ancient history to them and they don't share any nostalgia. Anyone under the age of 40 has either very vague childhood memories of the Soviet Union, or none at all. Moreover, in the last 10 years, Ukrainian national identity has grown stronger. Putin still believes Ukraine is a fake country somehow, that people are just Russians really.
Meanwhile he has became a cloistered dictator who nobody has contradicted for too many years. He is being told what he wants to hear and believes intelligence reports from separatists in Donbas are an accurate reflection of the situation on the ground.
This is why he was crazy enough to actually do it. He isn't crazy, he is an out of touch old man living in a bygone era. I don't think it means he is crazy enough to use nukes.