So this not 'the death of diesel for automobiles', though it may definitely be the death of diesel sales for VW in the United States.
As for public health suffering: the best way to improve public health is to promote cycling, reducing the total mileage a person spends driving during their life is the biggest public health benefit you could score and from that perspective whether you focus on diesel or petrol or CO2 emissions versus NOx as the most important is time, effort and resources wasted.
I'm trying to imagine everybody that I see cycling here driving a vehicle and the resulting pollution would be astounding, especially for short trips (when the catalytic convertor has not yet warmed up).