Remember that while it's called a "butt", it's actually the shoulder. That funky-shaped bone is actually the shoulder blade. It almost looks like you have a "Boston Butt", which is a bit smaller and chunkier than a full-size butt.
Something else to consider, is that when you actually smoke meat, it's really a moist-heat, low-temp cooking method. Moist-heat cooking methods are what break down the connective tissues over time. If you want to do this in your home oven, you really should do this covered, either in a covered roasting pan, or covering your cast iron skillet with aluminum foil. This traps the steam released during cooking, and helps to break down the connective tissues.
I do a combination method when I smoke a pork butt. I start out in the smoker, and will smoke it for 5 hours or so. Then, because I usually have other things to do, I'll heat up the oven to 250°F, bring in the pork butt, wrap it completely in plastic wrap, then in foil, and place that on a sheet pan, and into the oven for 4 more hours or so. This traps all the moisture and steam next to the pork, and helps to break down the connective tissues. I usually end up doing a total cooking time of around 8 - 9 hours. I have yet to undercook a pork butt, as the bone has always just slipped right out of the meat when I remove the wrappings.