This Hadith has two meanings. Firstly, so long as a Muslim does not kill another Muslim without valid reason, he remains, by the Grace of Allah, capable of acting upon the Deen. That is to say, he is more hopeful of the Mercy of Allah, and deserves it also, as long as he does not commit murder. When he kills an innocent person, the gate of Allah's Compassion is closed on him.
Ibn Al-Arabi interpretted this Hadith as follows:
A Muslim will still have ample chance for accomplishing good deeds to face evil deeds until he sheds blood. Or, he has the chance of forgiveness until he sheds blood. (M.R.M.)