The main issue is China's response. China would not allow the North to fall and the Peninsula to be completely controlled by the US-Friendly South, thus having US bases on their southern border. I imagine that the Chinese will either invade the North on their own, or it will be a Russia-in-Ukraine situation. (China sends forces & supplies to help the north, refuses official involvement)

Yep, I more or less agree but got to disagree on one point- I think there is as good as 0% chance that China will risk even indirect conflict with Japan, SK or the US so pretty much their only out in the situation is to invade NK themselves. The US and allies would never want to even indirectly fight China, either so I think if it ever came to war, it might even be framed as a china + US, SK & allies coalition VS NK. It's far more likely that China would make an agree with SK and the US about not having bases within a certain distance of their border, and the US and SK would be more than happy to oblige in order to maintain trade and positive relations. tl:dr The geopolitcal benefits of China preventing a unified Korea under southern control don't come close to outweighing the (mostly economic) benefits of positive relations between China and the US + allies and all the sides recognize this.

Especially in the modern day where war can be waged from a distance and bases close to their border, while still fairly important strategically, are less relevant than in any time in the past. I know it's said all the time, and globalization was even used as a reason as to why WWI would never happen, but in the modern world, any sort of even indirect conflict between china and the US, Japan and SK would ruin each side economically before a shot is fired.