I've got a different take on it. The north will move across the DMZ within a week of the outbreak of war in Iraq. Why? They'll never get a better chance and most of the Army will be engaged in Iraq. There won't be much we can do about it for sometime, if ever.
You don't pour all your resources into a military machine without wanting to pull the trigger at some point. He can't use it east or west, nothing but fish. North is out of the question.
My guess, try to outright destroy or enclose US forces into a Dunkirk style position. Take the remaining parts of country. Threaten to nuke any sea bound reinforcement or invasion force. Same for any force build up in Japan. They'd be a easy kill for the type of weapon. At this point, as a good will gesture, allow remaining trapped US force to be withdrawal. IF and only IF, we agree too a non-aggression type treaty. Game over. The only thing we could do at this point would be nuke'em and I don't think China would put up with that.
No I'm not going to bet. It depends on how nuts he is.