I agree a war is unlikely, at least insomuch as Kim Jong Un is able to control the situation. In truth the situation is becoming increasingly dangerous. When tensions are this high, it takes only one mistake or miscalculation by one side or the other to start a tit-for-tat exchange of missiles and shells that can snowball out of control.
So how did things come to this? Why is North Korea threatening to engage in a war they have absolutely no hope of winning? On the surface they would appear to be completely irrational for ratcheting up tensions like this. In fact they are anything but, and the appearance of irrationality is a calculated strategy to gain concessions from their geopolitical enemies. The problem is that this strategy is no longer working. Like the boy who cried wolf too many times, no one believes that the North will actually carry out their latest threat. (They've been threatening the South for years.) So instead of the regime providing the starving North Korean population with aid that was bullied from the United States and its allies, it has to sit by and watch the nation wither and die. This has made the North Korean regime increasingly desperate, and that is why they have escalated things as far as they have. With every beating of the wardrum they hope and pray that South Korea and the United States will finally get frightened enough to come to the negotiating table on the North's terms, as they have historically done. America has tired of playing this game, and South Korea seems intent on letting the situation unfold without responding to the North's rhetoric in any significant way.
I worry deeply about how this situation will play out, because regime survival is North Korea's one overriding geopolitical goal. It dictates all of their actions. Any action that weakens the regime (such as agreeing to end nuclear weapons development, reducing the size of the military, or implementing democratic reforms) is tantamount to the destruction of the regime, as it can provide no meaningful service to its people other than military might. They will resist that at any cost. If North Korea is forced into a position where they have to either fight or concede power, then they will fight. They will lose, but they will fight (and probably level Seoul in the process). I'm not so concerned with China, as a war is the last thing the Chinese want to deal with right now, and North Korea has become more of a nuisance than a serviceable ally to Beijing. So long as America limits its retaliation to an air campaign, Beijing will be content to sit on the sidelines and watch the North Korean regime disintegrate. From China's perspective, even a western-dominated Korea would be better than the current perpetual instability caused by Kim Jong Un. A buffer state is only as good as its ability to maintain regional balance.
All of this is only my own opinion based on things I've read online. A more professional viewpoint on North Korea's recent behavior can be found here:
http://www.stratfor.com/weekly/ferocious-weak-and-crazy-north-korean-strategy?utm_source=freelist-f&utm_medium=email&utm_campaign=20130409&utm_term=NKoreaUpdate&utm_content=title2&elq=1057284aa1e649ce83c18ca2f1eac2e9
