North Korean Propaganda War Video showing An American Aircraft Carrier being blown up:

I don't read or speak Korean, are they telling their people that they actually DID destroy an American ship or just demonstrating (with "special effects") what they want to do?

I was in the US Air Force (I didn't fly planes), and I remember my training instructors saying that the U.S. military presence posted along the South Korean border is symbolic and has no true physical application. If North Korea’s military invaded South Korea, the U.S. troops would easily get crushed due to their small numbers compared to the massive force of the N. Koreans. All of the U.S. troops would easily be killed. The broader U.S. forces (outside of S. Korea) would not have enough time to respond to the invasion of S. Korea by N. Korea. What would happen in the aftermath of the invasion is something entirely different, but the current “protection” of S. Korea by the U.S. military acting as “defenders” is a joke.

I agree, but what I'm asking is if the government of North Korea is deliberately deceiving their people and trying to make them believe that they actually did the deed, or is it a propaganda piece telling their people they plan/want to do it.

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I don't speak Korean either, but from what I've heard it's just a video with "special effects" showing what it would look like IF they did it.  Now that I've seen the video, it's really bad technology, and doesn't even qualify for "special effects." So if what I had heard was wrong on that point, maybe it's also wrong on the verbal content.

In any event, this probably qualifies as "sabre-rattling" especially when you take into consideration the recent news that several rockets have been test-fired from N. Korea, along with threatening words from the little chubby boy running the roost over there. We shouldn't say "Fat Boy" because that has specific implications in history.