The Two Koreas: Den Beste has an extended meditation on the tension in Korea. His conclusions are, in roughly equal parts, optimistic and pessimistic. On the upside, North Korea presents a minor military challenge, at worst. The downside? They know it, and appear willing to use it to their advantage:

They're trying to make it clear that if they feel themselves to have been pushed too far, then they'll attack south. It's not that they think they'll win; they know they'll lose, and their regime will be obliterated (either with nuclear weapons or by conventional force of arms). It's that in doing so they will be able to inflict intolerable damage on South Korea directly, and on us indirectly through economic effect of having the SK economy collapse, as well as in other ways (e.g. direct military casualties).

It's worth reading the whole thing, though it is quite long. For my part, I think Den Beste is spot on. The absolute hollowness of the Northern economy, the starvation, and the utter backwardness of the populace (recall that this is a country that still views Kim Il Sung as divine and Kim Jong Il as his semi-divine essence) conspire to give North Korea no choice but brinkmanship. They're surely not going to lean toward reform. Kim's only choice is to push the west and hope that our reluctance to fight buys another 1994, another treaty (for him to ignore), another influx of aid, another few years for his bizarre and delusional regime.