The issue is that North Korea is excessively paranoid and irrational. So it can't even undertake sensible reforms or outside interactions, and no one trusts them. That keeps North Koreans poor. Craziness as strategy is a bad strategy for national development.
In comparison, the Chinese government has been far more rational and demonstrated far more competance in raising wages and living standards. Comprehensive long term domestic development is actually the same goal in terms of government legitimatcy, government survival and wealth for all.
Oh I agree with that. Craziness is definitely not good for national development and can be considered paranoid. Lets be real though: every government is paranoid. However, I'm firmly against the idea of them being irrational. In my opinion, North Korean government has to consider several variables that even I as an ordinary citizen can think of:
1. South Korea can exploit the hypothetical reformation process to overthrow them. One can argue that China faced the same situation for Taiwan. While China was placed in a scenario like that for a while, Taiwan ultimately either never had any ambitions to reunify or was restricted from attempting to reunify. South Korea does though to this day. A color revolution may never occur like you said, but a North Korean reformation can create cracks like disgruntled officials, stalls in the reformation process and other unforeseen variables that an enemy nation can exploit.
2. Who would support them and provide a safe space for them to reform? The Russians are too poor despite what their ultranationalists claim. The Chinese can't force even South Korea to bend to its will (until recently, but even that's unclear). Sure, both of those nations covertly supported North Korea despite it being sanctioned, but that's not enough to provide a safe space to perform massive reforms. While China faced an even more dire situation in the 80's and early 90's, the Chinese had a couple of advantages the North Koreans didn't have: the US's need for China's pressure on the USSR and the sudden changes in the Middle East. North Korea has none of that.
3. North Korea has neither the historical clout nor the size to shrug off any attempts to destabilize it. China's size and the US's trauma from the Korean War protected China from any attempts for a successful Taiwan independence or reunification.
All of the above cast doubt on a successful North Korean reformation. Its easy for us to say "Just reform bro", but if you look at China's reformation process, it wasn't a walk in the park either and was, as a matter of fact, dangerous and difficult. In short, North Korea cannot reform as of now. Craziness is the only strategy they got.