I think that truly whether or not you would consider Nidhoggr to be a "God" or simply another entity depends on who you ask and what you personally feel is the right "definition". The different branches of Heathenry would all likely have different outlooks on how to "classify" Nidhoggr. An Asatruar may be reluctant to call Nidhoggr a "God" whereas a Rokkatruar may be more likely, and so on.
When it comes to worshipping Nidhoggr, there's a list of offering/gift ideas for Nidhoggr. One popular one is waste: recycling your garbage, giving back to the Earth (burying things that can decompose, starting a compost pile), cleaning up litter and pollution, etc are all suggested ways to honor Nidhoggr. I can't say how one would really "worship" or work with Nidhogg: to me, Nidhoggr is much like Fenrir in the sense that they don't tend to care one way or the other what you do and often how you try to be devoted. They're both more of a stand-back-and-appreciate-from-afar kind of entity (again, in my opinion and experience).