My interpretation of the China-Korea dynamic is bascially shared by a number of my colleagues in Communist Party policy research institutes in China. I think that their leaders are more or less at wit's end with Kim Jong-il. Over the years he has come to China by train a number of times. They show him the Shanghai stock market, the special economic zone at Shenzhen, new housing estates, etc. etc. He always expresses enthusiasm and agrees with apparently sincerity that the DPRK should also do opening and reform too and then asks for more grain and oil in the meantime. The same pattern has repeated so many times (including at his recent get together with Hu Jintao).
No one thinks anymore that the Kim family regime is actually prepared to undertake opening and reform. After all the example of China suggests that the people in political power when the economic reform program begins are out of power in a matter of a few years. Mao's successor Chairman Hua Guofeng was eased out rather elegantly as the Mao cult was wound down. A similar process in the DPRK would be ideal --- gradual reinterpretation of Juche and re-evaluation of the past (Mao was given the official 70% good/30% bad assessment 5 years after his death).
I don't propose that China should send in the PLA. They know they would likely end up in an Afghanistan-like polarized situation if they did that. I just judge that pervasive popular discontent with the idea of Kim Jong-un taking over would provide an opportunity for China to identify and support a pro-reform element in the military and Party. It is hard for China to play this for two reasons: 1. very strong Korean nationalism/xenophobia; and 2. the effect in China domestically if the DPRK's Stalinist institutions collapsed (because China's political system is based on the same model initiated by Lenin to suit the situation in post-Czarist Russia). But the DPRK leadership does see China as a kind of patriarch, I think, albeit one that they think has gone "soft" over the years. That is why they do China the honour of a ritual presentation of the successor for "approval."
I expect that the ROK would probably go along with China's "assistance" to the DPRK. If the ROK gets involved too early on things could go disastrously in my view.
I would further judge that reunfication of Korea would only come once China abandons Stalinist political institutions itself. I remain confident that that will happen before I retire from Brock.