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I view it much more about internal political power with respect to China. Having a very successful, free, and democratic Korea (what South Korea is right now) would spell trouble for the political system currently entrenched in China. Not to mention that it would be military/national security risk to have the US having technology, personal, and bases right over their border.
I don't think China would fight an all out war against the US as it is against their interest. However, I do think China will do everything in it's power to either keep a leash on the current North Korean regime or at the very least, keep a buffer between China and South Korea. I think they will threaten force and even use force if necessarily to acquire their goal but would fall short of all out war with the US. Then again, I think the US would do the same; it is in neither interest to have an all out war.
It will be interesting how it plays out.
Agreed. But I think Chinese involvement would greatly depend on the conduct of the conflict. I.e., Krazy Kim uses his atomic arsenal and all bets are off on Chinese support. So the conflict really would be at the mercy of the most stable North Korean leaders and if they believe all is about to be lost.