Twoop, Steve.
Been there, done that (prepped for the Korean O-Plan). NOT a pretty situation, and the devastation, to both sides, would be a rude reminder to the world just how horrifying war on this scale could be.
Two things have kept the peace over the past few decades: N Korea's threat to Seoul (which has a population closer to 24 million if you count the outer suburbs, which are also in N Korean artillery range), and the US presence on the peninsula, which are unfortunately there to suffer mass casualties to ensure America would respond if N. Korea attacks (in fact, our troop reduction and movement away from the DMZ a few years back made S. Korea VERY nervous on our level of commitment to defending them).
These two factors haven't changed (much), and have been an effective deterrent towards preventing full scale conflict on the peninsula. What also hasn't changed is Pyongyang's use of sabre-rattling to force the South (and US) to give them concessions. In this case, I think they are looking for the multi-lateral talks to resume (as Mongo pointed out), and are also probably looking for more food and technology shipments from the South.
It's worked before (multiple times), so why should N. Korea NOT think it would work again?
And to correct an earlier point from Hornet, while it is correct that the majority of the troops there are manning remote tours (one year tour, no dependents), I think about 1/4 of them are manning two year tours, with dependents on the peninsula with them, particularly at Osan AB. So, when would I start getting nervous? When I see us execute the plans for evacuating those dependents out of harm's way (massive airlift out of Korea, and remember those cargo birds would also be bringing reinforcements and supplies INTO Korea on the trips into country at the same time).
For now, my impression is our government is making a very visible statement to Pyongyang: "we are no longer just going to roll over and give you whatever you want every time you start acting up. THIS time, we'll ratchet up the rhetoric as well." Risky maneuver, hope it works out (and I expect it will).
Mongo?