well serial number doesn't means its operational, but the PLAAF marking & serial number suggest that now the aircraft is in operational test & evaluation by the PLAAF from the prototype stage. It might also mean, that there would be other prototype aircraft with the manufacturing company for further testing.
Yups, it will become more lethal, its just the first prototype, remember JF-17, what it started from and what it became, same case with J-10A to J-10B and more, there is the 06 testing prototype of JF-17, which means we would be seeing more changes to this bird also in future.