The Federation didn't do nothing; they condemned the Klingon attack. Given what we'd seen of Starfleet to that point, it's not unrealistic to believe that they were in no way ready for a spontaneous war with the Klingons, which surely is what would have ensued had they taken a more aggressive stance.
If the actions of the DS9 crew had led to a full-scale war with the Klingons, which the Federation had perhaps lost, would you still maintain they had done the right thing?
For the record, I'm not saying that what they did is wrong. Realistically I don't think we're in any position to make a valid assessment...everything we know about the situation is filtered through DS9's perspective.