You might want to read up on your history you can have up to 6 different factions, more countries fought in the war than just the united states and Korea/china. Why are you not able to tell a story? its a civil war that lasted 3 years and killed over 2.5 million people, thats a gold mine for a good story.
Well, that's also another factor that why they won't pick Korean war to make a game, because most people don't know about it. Look at WWII, people know a lot of "useless" information about it. By useless I mean the whole "Germans were this and Soviets were that", i.e WWII myths. And well, it was a world war.
Still, your point is valid but as a player, I'm not interested. There also might be political reasons (not likely though). All I'm saying is, there are a lot of subjects in history worth reading, but not worth making a game of. Arab-Israeli wars, Korea War, Chinese civil war (Mao), Mogadishu war, Soviet-Afghan war, Iran-Iraq war (which lasted 8 years), Falkland war, first and second gulf war... (we middle eastern have a great potential
).
Another reason, is the perspective. See how pissed off some Russians are because of CoH2? (I'm not gonna argue if they are right or wrong). The same thing will happen, and people will be more furious as you move forward in history. As a westerner, what ever they make people are gonna call them Pro-American developers.
You still might like the idea and you are entitled to your opinion.