You do realize that the Olympics IS a political event, right? It's really just an international **** measuring competition. Consider this-
1) Big wins and medal counts bolsters national pride. Why else would Russia run a de facto state sponsored doping program or the US have Olympic training centers? Because athletes accomplishments reflect positively on their nation.
2) Olympic games often cost the host nation money... so why would a country want to host the games in the first place? Because its a status symbol. Nazi Germany hosted both the winter and summer games in 1936 and was supposed to host in in 40 to demonstrate Aryan supremacy. Russia wanted to host the games in 08 (their first since the break up of the USSR) to remind the world that they were a super power. Not hosting the games makes you look poor and weak. Look at how much money the Chinese threw at Beijing- it was supposed to be a coming out party and the super impressive opening ceremony demonstrates that. Brazil's was supposed to be a coming out party too but... yeah... didn't go over super well. Their economy was doing great prior to 09 when Brazil secured the rights but pretty much fell apart afterwards.
3) Nations have boycotted the Olympics since 1936 to show their disagreement with other countries policies or actions. This isn't new.
4) Athletes too use the games as a political pulpit. See Tommie Smith and John Carlos in 68.
Anyway... to your point on NK. It's more international politics. NK has no aspirations for world, or even regional, domination. They know that its beyond their capabilities. Both Koreas would like to see the re-unification but obviously have different visions on what a unified Korea would look like. NK sees brought together under the Kim Regime which clearly isn't going to happen. A democratic free market Korea would mean the end of the Kim Regime which is unacceptable for NK. You have to understand that NKs only goal at this point is to preserve the Regime and they have proven to be masters in this department. NK escalates and escalates and escalates to gain an advantaged position and then comes back to the bargaining table to make concession in exchange for resources. So a few months ago they were firing ICBMs over Japan getting the world spun up into a tizzy and now they come back and say they want to be good neighbors. It's their process.