This 2.5-mile-wide strip of land is all that stands between about 1 million heavily armed troops ranged either side of the border between North and South Korea.

The atmosphere inside the demilitarised zone (DMZ), established after the 1950-53 Korean War ended in a ceasefire, mirrors the current state of cross-border relations: prolonged tension, occasional flare-ups, and a return to the status quo.

That precarious arrangement has prevented the two Koreas from going to war again, but failed to bring a real and lasting peace, say experts who believe the time has come for the US and its allies to consider a new approach to North Korea unthinkable just a week ago: dialogue.

On Sunday, Washington postponed a planned intercontinental missile test, giving encouragement to observers who have urged a more moderate tone in recent days. The initial high-octane response – which included flying B2 bombers over the peninsula– has only made a bad situation worse, so the current thinking goes.

"There has been a ratcheting down of deterrence gestures by the US, and that has helped cool the situation a little," said John Delury, a North Korea analyst at Yonsei University in Seoul.

Delury believes more aggressive diplomatic gestures could help ease the situation further, but only if the political will exists to begin even limited engagement with the regime. "This whole crisis has shown us how little we really know about Kim Jong-un, and we're not going to learn any more unless we talk," he said. "And talking isn't the same as backing down."

At the weekend, the South Korean media reported calls from both sides of the political divide in Seoul for the administration to send an envoy to Pyongyang to lay the foundation for talks.

A key new appointment in Pyongyang may have given the South an ideal negotiating partner: Pak Pong-ju, an economic reformer and pragmatist who became the North's premier last week. "He is someone everyone can work with, including China," said Delury.

There are clear signs that China's approach to its unpredictable ally is changing. It quickly signed up to UN sanctions after the North conducted its third nuclear test in February. Last week it voiced serious concern over the sudden escalation in rhetoric and urged calm on all sides.

Washington's best chance of altering the course of events on the Korean peninsula will depend on how much further Beijing is willing to go. China has traditionally supported the status quo, which allows North Korea to act as a buffer state between it and the South, where tens of thousands of US troops are based. But a continuation of the current standoff, which could include a build-up of US military hardware, is hardly in China's interests either.

China's leader, Xi Jinping, indicated on Sunday that it could respond to international pressure to rein in North Korea. He did not mention the state by name, but said in a speech to business leaders that no country should be able "to throw the region, or even the entire world, into chaos for selfish gains".

Switzerland, meanwhile, offered to act as a mediator with Pyongyang, according to the Swiss foreign ministry, which recently made contact with the North Korean authorities. "Switzerland is willing to contribute to a de-escalation on the Korean peninsula and is always willing to help find a solution, if this is the wish of the parties, such as hosting meetings between them," a spokeswoman said.

Attempts to break the cycle of pressure, concessions and North Korean violations of deals on its nuclear and missile programmes would only work if China, the US and South Korea could agree on their approach, said professor Kim Hyun-wook at the Institute of Foreign Affairs and National Security in Seoul. "They have to start speaking with one voice and not give North Korea the leeway it's had up until now to turn to China for help. It must be made to believe that it can't rely on China any more.

"But my concern is that the US won't go that far. It has a lot on its plate elsewhere and only cares about North Korea when it is threatened. But it has to come around to this new, united approach."

Washington may also have to drop its demand that Pyongyang abandon its nuclear programme. "It now seems impossible that the North will stop building nuclear weapons, so it might be that the US and other countries will have to talk non-proliferation rather than abandonment," said Professor Shin Jong-dae of the University of North Korean Studies.

Observers are waiting to see how South Korea's new president, Park Geun-hye, will turn her desire for "trustpolitik" with the North into action. A spokeswoman for Park said the administration recognised that past attempts to denuclearise the North had been unsuccessful. But possible confidence-building steps, such as the resumption of aid and cross-border dialogue, could still be some way off: "We have no illusions that trust is something that can be built overnight," she said.

"It is time for the international community to fashion a truly united front to press North Korea to denuclearise. North Korea's bellicose rhetoric is by no means helpful to building an environment for restarting dialogue. Nor do we believe this is the right time to consider such high-level talks."

But while tensions on the peninsula have eased in recent days, the DMZ is a reminder of how terrifying a cross-border conflict would be. Experts believe about 60% of North Korea's military assets, including 600,000 troops, are positioned on or near the border, the most heavily fortified in the world. Its artillery units, hidden among the mountains separating the two Koreas, could quickly destroy Seoul, just 37 miles away.

In an article for the Foreign Policy website last month, North Korea experts Victor Cha and David Kang said the North could unleash 500,000 rounds of artillery on the South Korean capital in the first hour of a conflict. The promise of mutually assured destruction has prevented war, but it has done nothing to stop the North from developing its nuclear programme and potentially holding the region, and the rest of the world, to ransom.

The US policy of "strategic patience" – sanctions coupled with displays of military power – has failed, according to Prof Kim. "The US doesn't have a policy on North Korea, only a fruitless cycle of sanctions and dialogue," he said. "And meanwhile the North's weapons capacity has grown much stronger."

At the DMZ "truce village" of Panmunjom this weekend, forces from both sides performed a daily ritual stretching back decades. North Korean border guards peered through binoculars into the South, where soldiers who have been selected for border duty because of their imposing stature stared back through mirrored shades, perfectly still in a taekwondo pose designed for maximum intimidatory effect.

Despite the barrage of threats from Pyongyang, all was quiet along the DMZ, where tourists were unperturbed by their proximity to danger and bought souvenir mugs and T-shirts, and rued their misfortune to visit on a day when a giant statue of Kim Il-sung, the Kaesong industrial complex and other features of the North Korean landscape were shrouded in mist. US and South Korean forces lined up near the barbed-wire fence running the entire 160-mile length of the DMZ have kept the communist wolves from its democratic neighbour's door for 60 years, our guide told us – although the South didn't hold free elections until the late 1980s.

In these volatile times, it is worth remembering the DMZ's other role. Straddling the demarcation line in Panmunjom are several blue huts, where officials from North and South have historically held talks aimed at building the foundations for rapprochement. Many consider them cold war relics; would that they became the setting for a long-overdue thaw.