Kim’s makeover is nothing less than an about-face. Formerly viewed by U.S. intelligence as a lascivious kook who might soon be able to fire missiles at America, he is now routinely described as logical, reasonable–and ready to deal. That would entail halting his missile and nuclear-weapons programs in exchange for massive U.S. aid, along with help in installing civilian satellite and nuclear-power capacity. “He strikes me as very decisive and practical and serious,” Albright said after six hours of talks with him. A senior administration official, asked whether any U.S. intelligence on Kim had been accurate, could respond only that “he may have changed over the last years.” Others are more forthright. “It shows you what idiots we are,” says Bob Manning, a former State Department Asia policymaker. “North Korea is one massive intelligence failure.”

But Kim’s new profile raises a lot of questions about the U.S. strategy in Korea–and in Asia as a whole. First, with President Bill Clinton contemplating a visit to North Korea in his final weeks in office–a visit bound to be even more of a lovefest than Albright’s was–is Washington going too far too fast in trying to cuddle up to Kim? U.S. officials believe he’s ready to make deals now because he understands what a desperate state his economy is in. But if so, some Asia experts say, why is Washington not demanding more, like forcing him to account for missing nuclear-fissile material, in return for the billions in international aid Kim so badly needs? Last week Albright looked uncomfortable applauding next to Kim at a performance of 100,000 dancers and acrobats that was a paean to his totalitarian system and his missile and nuclear program. In the end the appearance added nothing to her reputation and was a big bonus for Kim. A Clinton trip would do even more to legitimize him in the world’s eyes. “There’s no reason to suck up to them,” says Manning.

Clinton-administration officials insist they’re not. This week, Robert Einhorn, Albright’s nonproliferation expert, is to resume talks on North Korea’s missile program that U.S. officials say are critical to deciding whether Clinton will visit. In those talks, U.S. officials are demanding an end to missile development and sales–and a monitoring capability to be sure it happens–in exchange for massive aid. “What is already on the table, if it were to come to pass, would be profound,” says a senior administration official.

Of course, it’s far too soon to say how benign the “new” Kim Jong Il really is. If he seems reasonable now, that mainly has to do with his willingness to cut a deal on missiles and nukes. In other respects, however, he seems to be living in a bizarre dream world. At one point during their talks, U.S. officials said, Kim blamed his central planners, rather than his nation’s lack of markets, for the fact that his people have no anesthesia or meat, and few cars or appliances. At another point, this autocrat who wallows in a Stalinist-era personality cult spoke of the “Swedish model” of reform–something that requires a modern market economy and democracy.

Kim also commands a society bent on obeying him. Such mass psychology has proved dangerous in the past, whether in Nazi Germany or China under Mao. The zeal of the performers at last week’s mass spectacle could easily become the fanatical suicide charge of a million-man army in extremis. That’s one reason U.S. officials say they don’t want to demand too much at once. “You don’t want to be in a situation where a state like North Korea is not only desperate but also has the means to hurt you,” says another U.S. official involved in talks with North Korea. “So what we’re trying to do is reduce their desperation and their means of hurting us.”

During Albright’s two-day visit last week, the depths of North Korea’s desperation–and the reason for Kim’s outreach–became apparent to the more than 50 journalists who accompanied her. In the 10 years since North Korea lost its Soviet and East-bloc partners, its economy has run utterly off the rails. In North Korea “everybody has a job,” as one official insisted, but few factories run. It is a country ruled by juche, Kim’s ideology of self-reliance, but kept afloat by international food aid. In the stores, shabby consumer goods sit unsold under coats of dust, often falling apart within hours of being used. Those impressions have been reinforced by recent satellite images: pictures of North Korea’s Nodong missile site earlier this year, for example, showed a much more primitive capability than officials had thought. South Korea, in contrast, is now the eleventh largest economy on earth; as recently as the 1960s, it was at parity with the North.

Kim’s moves to beef up his conventional Army–including laying fiber-optic cable for command and control, and stepping up exercises–are still considered serious. Still, no one believes any longer that North Korea could win a drawn-out war with South Korea, much less with the United States–another fact that the newly practical Kim Jong Il probably knows.

Ultimately, if Kim truly opts to become friend and not foe, a lot of other things could change for the United States in Asia. And not necessarily for the better. Consider: by being willing to engage his former enemies, Kim undercuts his importance in Asia. Kim’s rogue status was almost the only reason the world cared about him. By opening its door, North Korea may move swiftly from threat to farce.

But the removal of North Korea as a bugaboo, following the waning of the threat from Moscow in Asia, would some day leave the United States without an obvious enemy there. The Chinese are bound to think that they are the reason for America’s continued military presence. And that, U.S. officials fear, could prove to be a self-fulfilling prophecy, creating a U.S.-Chinese cold war in Asia. Indeed, it is noteworthy that the Chinese have been so active in pushing Korean rapprochement. One obvious reason, experts say, is that a cooperative Kim undercuts the argument for national or theater missile defense in Asia, which will strengthen the Chinese vis-a-vis Taiwan.

If democracy truly takes hold on the Korean Peninsula–leading some day to reunification–it could yield other complications for Washington. While at present most Asian nations want the U.S. military presence in the region in order to keep the peace, some observers fear that public opinion will rise against U.S. hegemony in a newly democratized Asia. Nations might seek to kick out the U.S. Navy from local ports, not to mention the 100,000 or so U.S. troops based in the region. This, of course, is what happened in the Philippines in the early 1990s, when Manila forced the U.S. naval base in Subic Bay to close down.

The result is that the Clinton administration is clearly not too eager to move fast. It is not pushing democracy in North Korea. And it is trying a little image makeover of its own. Washington is seeking to de-emphasize America’s role as a traditional ally to South Korea and Japan in the region and play up its value as a regional stabilizer or a balancing force. This shift parallels in some ways what has happened to NATO in Europe, but it is still at its beginning stages. “Just to insist on our role is not enough,” says James Laney, the former U.S. ambassador to South Korea. “We have to help public opinion in South Korea, Japan and Russia to understand that we are not just playing the role of a hegemonic aggrandizer but a peacekeeper.” Albright herself called the situation “very, very dynamic.” The question now is, how will the newly pragmatic strategist in Pyongyang play it?