A few years ago U.S. intelligence portrayed Kim as a lascivious nut who might soon be able and willing to fire missiles at America. Now he is routinely described as logical, reasonable and willing to make a deal that would entail halting his missile and nuclear-weapons programs in exchange for massive U.S. aid, along with help in installing civilian satellite and nuclear-power capacity. “He strikes me as very decisive and practical and serious,” Albright said after six hours of talks with him. A senior administration official, asked whether any U.S. intelligence on Kim had been accurate, responded only that “he may have changed over the last years.” Others are more forthright: “It shows you what idiots we are,” says Bob Manning, a former Asia policymaker at the State Department. “North Korea is one massive intelligence failure.”

During Albright’s two-day visit, the depths of North Korea’s desperation–and the reason for Kim’s outreach–became more apparent than ever. In the 10 years since North Korea lost its Soviet and East Bloc partners, its economy has run utterly off the rails. It is a country ruled by Kim’s ideology of juche, or self-reliance, but one beset by famine and malnutrition and kept afloat by international food aid.

Yet Kim’s image makeover also raises questions about the U.S. strategy in Korea–and in Asia as a whole. First, with President Clinton contemplating a visit to North Korea in his final weeks in office, is Washington going too far too fast in trying to cuddle up to Kim? U.S. officials believe Kim is ready to eliminate his missile and nuclear programs now because he understands what a desperate state his economy is in. But if so, some Asia experts say, why is Washington not making tougher demands–like forcing him to account for missing nuclear-fissile material–in return for the billions in international aid Kim so badly needs? Last week Albright looked uncomfortable applauding next to Kim at a performance of 100,000 dancers and acrobats that was a paean to his totalitarian system and his weapons program. A Clinton trip would do even more to establish his legitimacy in the world’s eyes. “There’s no reason to suck up to them,” says Manning.

Clinton administration officials insist they’re not. This week Robert Einhorn, Albright’s nonproliferation expert, is to resume talks on North Korea’s missile program that could determine whether Clinton visits or not. U.S. officials are demanding an end to missile development and sales –and a monitoring system to be sure it happens–in exchange for aid. (He has already frozen his nuclear program.) They also want Kim to scale down his conventional forces in talks with South Korea.

It’s far too soon, of course, to say how rational the “new” Kim Jong Il really is. In some respects, he still seems to be living in a bizarre dream world. At one point during their talks, U.S. officials said, Kim blamed his central planners, rather than his nation’s lack of markets, for the fact that his peo-ple have no anesthesia or meat, and few cars or appliances. Yet Kim’s tenuous hold on reality is one reason why U.S. officials say they don’t want to ask for too much at once. “You don’t want a situation where North Korea is not only desperate but also has the means to hurt you,” says a U.S. official.

Ironically, if Kim opts to become friend and not foe, it could even prove a headache for Washington. With Moscow no longer a real threat in Asia, the United States would be left without an obvious enemy in the region. China is then bound to conclude that it is the reason for America’s continued military presence. To pre-empt that, the Clinton administration is trying a little image makeover of its own. Washington would like to de-emphasize its role as a traditional ally to South Korea and Japan in the region and play up its usefulness as a regional stabilizer. Albright herself called the situation “very, very dynamic.” The question now is whether Pyongyang’s newly enlightened strategist will play along.