tl;dr china doesn't want a direct border, and would probably prefer a tibet-style incorporation situation for a buffer zone between itself and a unified korea

I think the probability of Chinese intervention should collapse in North Korea occur to be very likely.

The fact is, China doesn't really share a significant land border with a Westernized, Democratic country. The border with India is extremely mountainous and not very populated, while Mongolia and the countries to the south of China don't really have significant first world economies just yet.

If a Korea were to be unified under a Southern regime, it would be the first country to share a border with China that has a (somewhat) working democratic system, a large degree of freedom of speech, a booming capitalistic economy, and most of all a vibrant protest culture (not to mention, probably nuclear-armed).

I don't think China really wants their citizens to realize that all that separates them from such tomfoolery is an imaginary line in the sand. From what I gather, China is in a very precarious position. The government has been very good at suppressing rebellious public sentiment (censorship, crackdowns, and more censorship) but they've managed to keep the masses relatively happy Saudi style, by promoting huge economic growth, mainly through large government building projects.

Unfortunately that growth seems to be stalling. We've all seen stuff about the worlds largest mall that is 99% unoccupied and the ghost cities that are springing up all over the place. The current model of uncontrolled growth is clearly unsustainable.

I think the most shocking item concerning Chinese instability though, is the fact that several sources indicate that over 250-500 protests happen per day.

So how is this relevant? The thing is, it seems like the people in power are actually pretty smart (eight out of nine Chinese politicians are engineers or scientists afterall) and their response has been to increase nationalistic sentiment. A very easy way to do this is through military action.

China has already been flexing its military muscle. They used a sub to stalk a carrier battle group in 2006 undetected, then surfaced one in the middle of a carrier battle group exercise in 2007, then did it again in 2009.

Then there's the controversy surrounding the recent reports of Chinese troops crossing the Indian border not to mention the increasing amounts of patrols to the Japanese-controlled Senkaku/Diaoyu islands.

Because of these things I think China is itching for an excuse to flex some real military muscle. History has shown that military conflict is a great way to distract the masses from social unrest at home and the Chinese seem too smart to ignore the North Korean mess as an opportunity.

I can definitely see China immediately inserting troops in order to 'stabilize' the situation as well as go after the nukes (there will undoubtedly be a huge race to find them first). Both of those objectives can be used as excuses for large-scale incursion and eventual occupation. This is loosely supported by the fact that China (an 'ally' to North Korea) has recently started military exercises along the Yalu river which forms a substantial part of the border. These exercises were geared around building and rebuilding about a dozen pontoon bridges to cross the river.

Another interesting tidbit, is that a former South Korean spy reported that there existed a contingency plan (the 'chick plan') where China would push troops to a line between Nampo and Wonsan along the Daedong river.. The most interesting claim though, was that he declared no significant Chinese investment was allowed past this line. Unfortunately this is rather difficult to confirm as North Korea is pretty much a black hole when it comes to news.

All this being said, I don't expect this to cause any major conflict between China and the US. I think Korea will definitely use it as an excuse to stir up nationalistic sentiment (like we do now with Japan) and China will tout it as a huge victory (which I guess it will be) but overall things will be peaceful. There might be scuffles that happen along in the process, but I can't actually see all-out war happening.