The CIA's files on Kim Jong Il indicate that he's not batshit by any stretch of the imagination, except for a case of general megalomaniacal sociopathism called Malign Narcissism. From the description of that condition, I'd estimate that it's nearly a prerequisite for attaining high political office in a human society, or propaganda work; Kim Jong Il has done both.
Likewise, another article I read spoke of the Pyongyang ambassador stating that the US, four days after signing an accord in which both N. Korea and the US promised concessions, immediately painted the entirety of N. Korea as a criminal state and sought significant damages against the nation which may well have been in violation of that accord. Writer of the article indicates that the ambassador was under the impression that this nuklear development was a last-ditch attempt to open dialogue.
This works nicely with the description of Kim Jong Il as being a largely sane, balanced, intelligent, machiavellian individual.
So yeah, the propaganda mills on both sides are running full bore from the sound of it, and I admit, I don't know quite what to believe. However, I find it's usually a good idea to assume the most selfish behaviour on the part of politicians, which usually means grandstanding and giving scads of money to friends, even at expense of their own future survival. If there's money for friends to be had in this, I would expect more of that.
