For all its supposed numerical strength I wonder how many of those ships, MBTs etc... are actually in a state of good repair. The capital outlay for weapons is significant but relatively insignificant compared to the cost of maintaining them. I doubt many of the Beagles or Mig-17s or even the Floggers are in any state of serviceability.
In the event of a conflict I think the main concern would be the artillery batteries aimed at Seoul. Once that threat and the nukes likely aimed at Japan/SK are neutralized, I doubt the North Koreans would have any offensive ability at all.
Their huge advantage in manpower isn't mechanized, either. They're leg infantry. In the first hours of the attack, they are going to be filled with piss n' vinegar, which will peter out when they have to hump it under fire all the way to Seoul.
Still, the North is neither crazy nor stupid, and they are pretty adept with using conventional forces in a way that suits asymmetrical warfare. They know what they lack in modern equipment they will make up for by throwing curve balls at you. They maintain one of the world's largest special forces branches which incorporates that philosophy. They'll of course infiltrate those guys, some of them probably sleeper agents already in South Korea or in Japan. Then it will be interesting to see if they have any undiscovered tunnels they can move tanks and equipment through. Then as you say, the artillery and rocket forces will serve more as terror/spoiler weapons to thrash targets in South Korea and perhaps Japan rather than to win the war alone militarily.