I agree with your traditional take on this.
I would suggest China is a realist here. They know North Korea is a wing nut enterprise. There’s only so much they can do.
You’ve got a nuclear state. It’s run by wing-nut nut-jobs. What’s China going to do, risk it’s own provinces?
This is a mess. It’s a colossal international melt-down....
I don't think Red China would allow a unified Korea under a free, multiparty government, and South Korea may not want to pour its wealth into North Korea to make up for 69 years of Communist rule there. But the Chinese might find a way to install a saner Communist regime more like Vietnam or Laos.