"It's time we treated them as Reagan did the Soviet Union and, as painful for us as it would be, pulled the market and support out from under them."
I agree, but as you've noted, that's easier said than done. However, it looks like Japan has begun doing just that in response to the wave of anti-Japanese sentiment that has stormed through the country lately.
That will be a heavy price to pay for China.
Where did you get that? I don't see them pulling out at all -- if they did, China will respond by not importing stuff from Japan and given that China is Japan's BIGGEST export market and Japanese economy is based solely on exports, it'd hurt them greatly.