"What's the point in Google portraying itself as company with strong principles when it won't stand up and defend them? What would it be losing if it refused?"
This is indeed odd. youtube.kr is a US-based website hosted in the US. I don't see how Korea thinks it has jurisdiction over all websites using korean characters. (If they can demand that youtube.kr require real names, why can't they demand that youtube.com require that? I can log into youtube.kr with my .com account, which is definitely not using my real name. In fact, I am <i>automatically</i> logged in.)<p>If I were less cynical I would make some comment about this being an April Fool's joke... but it's probably not.
"we have a responsibility to protect your privacy and security" is compatible with forcing users to use real names. It is not compatible with disclosing private data that the user has entrusted to you.