Because YOU are right that a nuclear North Korea is at least as much a threat to China as to anyone else. Part of the subtext in all this is that Chinas proximity as much as our militarys made North Korea their de facto satellite, but nuclear weapons could change that. The Kims (or whoever calls the shots there) had little choice but to do as China told them so long as they had the PLA looking over their shoulder, but intermediate range nuclear missiles deter Chinese invasion at least as much as an American one. A truly rogue nuclear North Korea is a huge threat to China as well as to South Korea and Japan; the difference is China can do something about it.

Then the issue is: What of the REST of Korea? Perhaps the question is not "Would China let the US occupy all of Korea" but "would the US let China occupy it"?