German rearmerment first started secretly when Hitler and the nazis took power so by the time hitler said that they were rearming they already had a stronger army then what the treaty allowed. Germany befor that announcement, in 1935, had left the League of Nations to prevent foreign limitations on this issue. Hitler had denounced the treaty before and stated that he would not follow the treaty, in fact it wasn't exactly popular with most Germans. As for why nobody got involved they didn't exactly have much authority to go in to Germany. If say France did invade to enforce the treaty they would be met with resistance from the German people and probably would not have gains much support from other nations in this. Nations like England did show their displeasure with rearmerment but nothing beyond that.

Source: http://www.globalsecurity.org/military/world/europe/de-rearmament.htm