If Seoul is their first attack, it's game over for NK. But if it's Japan or the US, they still have that ace up their sleeve unless we're prepared to destroy a LOT of NK VERY quickly.
Where does the staggering amount of money needed to fix the country come from? Or would we (the world) do something like set up a new government keeps living conditions the same and just slowly improve them overtime to prevent some kind of… shock? Just to keep costs under control?
I know people have some plans but if you could just beam all the administration off the planet tomorrow would anyone be prepared for the consequences of that?
While the situation in North Korea is certainly more dire, East Germany's economy was also largely incapable of competing and summarily shut down over the next few years, being replaced by new businesses to varying degrees of success.
NK is currently capable to feed itself under normal conditions, and to provide some basic necessities of life. Without a doubt, South Korea would have the means to provide what is missing to get to a basic, yet dignified, quality of life–especially with the certain help of the rest of the world.
I wouldn't worry too much about indoctrination. Look at Germany after WW2 and East Germany after reunification, or Russia after Glasnost, and you'll see that such top-down ideologies have limited staying power once they're no longer enforced. With the sudden availability of sandpaper and toilet paper distinct from each other, it'll be incredibly hard to continue believing in the old myths.
North Koreans probably lack the education to compete in the South's job market, but with an influx of cash, and an economy unshackled, the first years would see a boom in agriculture and construction–industries where North Koreans should be able to participate since they already exist. Some new techniques or materials appearing should increase productivity, but won't be impossible to learn for someone who has experience in those fields.
The structure of North Korea as a police state should actually work to its advantage in the first period, as well as the connections Koreans still feel for their relatives on the other side of the border. I'd be extremely surprised if there were any opposition to new leadership, or any violent or destructive trends.
The real problems will happen after a decade or two, when North Koreans have gotten used to a new standard of living, yet still lack the economic structures the make the South successful. Resentment might grow, in both directions. There'll be "stupid/lazy/obedient North Korean" jokes in the South, and impatience with the continued flow of money required to prop up the flagging economy. Meanwhile, the North will resent the arrogance of the South, start being envious of the success across the former border, and possibly start a long process of making sense of the rapid changes, their identity, and the historical injustice that randomly plunged them into darkness, while others, completely indistinguishable from them, got to enjoy their lives.
Those problems won't be insurmountable, as long as there's some leadership that doesn't budge from the necessity of the process.
By which I mean, I'd chip in to calm him down. I'll buy him a gently used Toyota, tomorrow, if it means he will settle down. I'm not even kidding. I'd even take him at his word. Hell, set up a PayPal account, and make it legal, and I'll send him money every month that he doesn't harass his neighbors. I'm pretty sure I'm not the only one.
Hmm... We should crowdsource Un's Scotch fund. I'm only partially kidding.
I don't think they are harmless but I also don't think they are suicidal, this just happens to be the only leverage they are willing to use.
The minute they destroy a real city they are game ends and the rest of the world is going to actually do something. They LOSE negotiating power and are inviting in attack against them that will destroy the regeime.
1. Is wrong because the decisions aren't made by the average North Korean, but by the leadership, which is living quite a comfortable life. At least more comfortable than death, or a war crimes tribunal.
3. The international community would absolutely tolerate proportional retaliation. For a nuclear attack (the only option North Korea would have against anything but Seoul), it is widely assumed that the US would retaliate with nuclear weapons. Even if some US president were to stop short of nuclear retaliation, there is no possibility of NK leadership surviving an attack.
The game theory mechanics aren't really that complicated. It's mostly the same as the cold war's Mutually Assured Destruction. Except the cold war scenarios always had the wrinkle of "if our enemy has already destroyed our country, and killed almost everybody–what is the purpose of retaliating against their population (which, by and large, would be just as innocent as ours)". NK doesn't have the ability to create destruction on such a level. Therefore, there would still be a United States (and many other countries) to protect. And such protection would be achieved by denying NK the ability to strike again, and by setting a precedent to discourage such actions by others.