It's a matter of ego, really. North Korea did not break the condition since they considered "the border" to be the border that is recognized by them. If the RoK did not want to bring this upon themselves, they would've been more specific in their warning.
Bottled water. In most cities tap water is just as clean as bottled water and in some cases bottled water is just bottled tap water, and it costs what, a few thousand times more?
I understand that this is necessary in places where the water is real shit, but here where I live I doubt tap water...