"In the midst of all this, he ran a military parade that highlighted his ballistic missiles".
North Korea's participation in the Olympics has already allowed Kim Jong-un to undermine President Donald Trump's pressure campaign, with some sanctions suspended temporarily until the event ends.
Mr Moon said in response the two countries should create the environment for that to be able to happen.
"The current state of the Korean Peninsula is so dizzying because South Korea, North Korea and the United States are each thinking too differently", the newspaper said.
The gesture sought to further exploit divisions between the US and South Korea, which differ on the best way to rid North Korea of nuclear weapons.
It's by far the most sustained public presence for Kim, who had been something of a mystery to many South Koreans, despite her known role in North Korea's politburo.
Invited by Moon for lunch at Seoul's presidential palace, Kim Yo Jong verbally delivered her brother's hope for a summit with Moon in Pyongyang, a meeting that she said would help significantly improve ties after an extended period of animosity.
The North Korean leader shows no sign of budging on his nuclear program, having conducted four nuclear tests since he took power in 2012 and nearly perfecting an intercontinental ballistic missile capable of reaching the continental U.S.
US Vice President Mike Pence, who has left South Korea for Washington, said the United States, South Korea, and Japan were in complete agreement on isolating North Korea over its nuclear weapons program. His approval ratings, while still high at 63%, fell after he pushed for a unified women's ice hockey team for the two Koreas.
In recent years, the North has been testing nuclear weapons, including ones that supposedly have the power to reach the United States, which has left many on the global stage on edge.
"The appearance of the players and the impressive picture of the cheering groups once again made the spectators feel keenly that the Korean nation is a. nation which can't live separated from each other", it said.
For instance, in early January, President Trump childishly tweeted that he has a "bigger and more powerful" nuclear button than Kim Jong-un.
"I was encouraged by the affirmation of our alliance and our common goal, from both (Japanese) Prime Minister Abe and President Moon", Pence said. Many in Seoul, however, while interested in the warming high-level contacts, are also tempering expectations for a real breakthrough.
Though South Korea is hosting the Winter Olympic Games for the first time, the nation has some experience in the world of worldwide athletics, having hosted the 1988 Summer Games in Seoul. VP hangs out with US athletes instead of dining with Kim regime.
Moon first met the delegation at the opening ceremony of the Pyeongchang Winter Olympics on Friday.
'Having these red communists in the heart of Seoul is an utter humilation!' one protester shouted near the venue as dozens of others waved banners condemning both Moon and Kim Jong Un.
"It seems clear", he said, "that the countries have entered a phase of restoring a regular level of contact".
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