I always believed that we assumed Kim Jong-Il was bluffing.
I've never once heard that before.
I’ve read up on it, and it’s inconclusive. The DPRK has a nuclear reactor, which we know they have extracted plutonium from. It is also quite possible that they have the equipment and know-how to turn plutonium into nuclear weapons. That being said, they’ve never actually tested a nuclear weapon, which they surely would if they wished to demonstrate their nuclear capability to the world. Besides, every other country with known nuclear weapons has done so. Also, they are very keen to demolish their program in exchange for concessions from the West, which suggests to me that it might not be working too well.
Either way, I’m not too worried about North Korea provided that China remains friendly with the West. It is currently hemmed in by other powers and has a lot of internal problems and little to gain from aggression.
I’m more concerned with the possibility of the Governments of either Pakistan or Saudi Arabia falling. Pakistan does have nuclear weapons, and Arabia controls a lot of the world’s oil supply and definitely has the potential to develop them.