This Chinese model is undoubtedly a viable way for NK to get out of their current mess. I would just caution though that just because China is right next door, and has some cultural heritage in common with them (which both countries' Communists of course reject) not to assume that this is the most obvious thing for them. When I was in North Korea, my guides couldn't care less that the Olympics were going on only several hundred miles away - they didn't find any ideological validation from that, the way China did so enthusiastically.

Another model for resisting a more powerful foe, which I think the North Koreans will see as equally valid, would be the Islamist one. Create roadblocks for everyone, and let yourself be guided by a moderately coherent set of demands which will never come to pass. Though Islam isn't universalist like Soviet Communism, Chinese Communism isn't either, so the two are on equal ground on this point.

Korean culture seems to take very well to religion, compared to other East Asian cultures - at least South Korean culture is that way, and I would assume there's something universally Korean about that. I've been reading recently about how prone North Koreans are, on a personal level, to infighting over nothing. (This is the sort of basic intelligence which is crucial to understanding a country, and Western culture in general tends to focus too much on the government, without understanding its total role in society.) Perhaps the North Korean authorities might see fit to address this problem, linking it to official corruption, under the guise of political reform. This could be through some sort of Confucian revival. Political Islam shows them how they can do this without taking the edge off of their anti-Americanism. So while they might appear to lose their Communist ideology, the only change in their foreign policy might be some degree of economic power to use behind their threats. China recently has been thinking about returning to its Confucian roots (for instance, Confucius institutes overseas) so this may turn into fad. This wouldn't necessarily put the US in any better of a position.

I think it therefore is important not to appear to be giving too much attention to problems in the Middle East, in order to make that model of politics look less viable - these things are all connected as parts of the same system. From this perspective, it's not so important that there be a peace settlement, just that the US not have its hands on whatever happens. I suspect that giving the various ME actors more ownership over the peace process will actually be beneficial in the long run. More practically, the anti-American and anti-Israeli sectors of political Islam aren't necessarily one and the same, and I think it is possible to talk about splitting the two. This is what I mean by a dual-use policy: it's not duplicity, just putting a higher priority on something that should have been done anyway.