I would probably replace it but before I did I would take a good razor and slice it down the middle and take a good look at it just for fun.
Or take it off and hang it on the wall..you don't see a nail do that every day
If it were me, I'd prob razer along the length to get the nail out and spread it apart to see what damage is on the bottom. Then make a call on replacement. As from the picture it doesn't appear to be below tread depth, but that's hard to tell..
The head of the nail was worn off, im sure it didnt go in that way. If there was a problem with the carcass of the tire it would have failed with that nail moving around while contacting the road.
