The drills carried out by the US and South Korean forces were in response to the sinking of a South Korean warship in March. if you missed that you can catch up here. Indeed the threat of War from both sides I believe is minimal. The last thing Obama wants is another war while his efforts to wind down US involvement in Afghanistan are faltering and North Korea, a country with a devastated economy and aging leader surely doesn't want such unrest during a leadership exchange.
So I believe the military drills and also the aggressive reaction are in fact nothing more than political bench-pressing. But the North has "promised" a "physical response". The drills are scheduled to go ahead from Sunday until Wednesday. The people of the South will no doubt be waiting for their climax with bated breath. And as I have previously stated violence is quite unlikely but Kim Jong-Il has proved himself to be nothing less than belligerent in the way he handles international relations.
His administration has used some rather frightening language in the past saying the South would experience "unheard of disastrous consequences" if it misunderstood the North's will. It has also labelled the US an "empire of evil" and it has dubbed Hilary Clinton a "funny lady" and stated she "Sometimes she looks like a primary schoolgirl and sometimes a pensioner going shopping". However, most amusingly of all it claimed former President Bush was "a hooligan bereft of any personality as a human being, to say nothing of stature as president of a country. He is a half-baked man in terms of morality and a philistine whom we can never deal with."