If Britain invokes article 16 then the EU can build the hard border, but it would not do Irelands and the EUs aspirations for a united Ireland that has always dogged the negotiations. Someone's bluff will have to be called. The Unionists were sold down the river and are still armed. The "peace lines" have never gone after decades of the Good Friday agreement. The marching season could be a real flashpoint.
I very much doubt that the UK government is going to invoke Article 16 anytime soon. We are in for a period of protracted talks and extensions to grace periods I suspect.
But I would like to comment on some of the implications of the post above. It's a long post, but bear with me.
You're correct to say that there have continued to be ongoing inter-community tensions since 1998, but the impact has reduced significantly to be mainly criminal activities rather than terrorist in nature. I'd also point out that the main element of the marching season is now done, with only a few parades left between now and the end of August, so I think that risk has moved on for this year.
And while Ireland does have an aspiration for unity, it has clearly stated that it can only happen on the basis of consent by the majority in NI, so let's not suggest that has "dogged the negotiations". Most people in Ireland do I think realise that any such change would be extraordinarily complex, and would require a significant majority approval in NI to work (not 52/48 like Brexit!). I think that it does need to be said that Ireland did not choose to be in this situation. Ireland wished for the status quo on the island to be maintained. But realistically Brexit and the desire to maintain an open land border mean that the Irish Sea is the only place that some form of trade border is located, given the length and nature of the land border, which bisects some towns and farmlands. There is no magic technological solution in existence anywhere that would respect the integrity of the EU Single Market and the integrity of the UK - there have to be checks somewhere unfortunately.
It is my view that the Brexiteers in the UK Parliament wanted Brexit delivered at any price, and that they accepted the NI Protocol as a means of delivering that, even if it upset the Unionists in NI. But they also clearly thought that it could then be changed after the event. But this notion of re-negotiating international treaties, a short time after signing them due to internal political needs, is clearly not a good way of conducting international relations.
The Irish Government, supported by the EU, wanted a solution that maintained the open border between Ireland and Northern Ireland, which did not have any form of customs checks or border posts which could potentially reignite dissident republican terrorism. Remember that were that to happen, it would cause Ireland to have to increase security measures along the border too, something that no government here wants to have to deal with again. That exact risk was put very clearly by the Chief Constable of the PSNI along with the Garda Commissioner during the referendum campaign and during the negotiations, along with Julian Smith when he was NI Secretary. That frankly is the greater issue here rather than any desire for a United Ireland. The EU have clearly supported the Good Friday Agreement, through funding many initiatives under the peace process. Cross-border human and economic activity between Ireland and NI before Brexit had increased dramatically as a result of the peace process, and for many people using different currencies is the only visible difference between the two jurisdictions.
I think that it does need to be mentioned that a majority of the people in NI wanted to maintain the status quo in the referendum, a majority of NI Members of Parliament support the Protocol, but of course given that Sinn Féin don't take their seats, this isn't that visible. Also a majority of MLAs in the NI Assembly support the Protocol.
I've no doubt personally that the DUP, prior to the referendum, saw Brexit as an opportunity to reinforce NI's position in the UK, and to re-establish a customs border between Ireland and NI. Hence they campaigned vigorously for it. But they completely misjudged international opinion on that, particularly the reaction from the US. And that has resulted in the siege mentality returning.
I think that treating people in NI like idiots as the UK Prime Minister and senior members of the Government have, by denying that the NI Protocol did create any form of trade border between GB and NI, when it clearly did increase the number of checks, has certainly not helped one iota. Nor did the brief threat by the EU to invoke Article 16 - that was one of the miscalculations of the century so far. Anything to do with NI requires a significant amount of tact and finesse, and that was akin to sending a bull into a china shop. Clearly the Irish Government moved to quash that threat as fast as it happened, but the damage was done. Loyalism saw that as the perfect opportunity to ignite tensions and have played on it ever since. Elements of loyalism (mainly criminal, although egged on by some less than advisable comments from some in Unionist politics and the Conservative government) are reverting to the siege mentality, and trying to portray this as yet another threat to their existence and have whipped up tensions, often mainly due to increased checks making the criminal elements' lives more difficult.
All of that being said, the two parties to the treaty, the UK and the EU, need to sit down and come up with derogations that facilitate GB-NI trade for goods that clearly aren't going outside of the six counties of NI. Both sides also need to dial down the rhetoric, as words do matter significantly in NI politics, and acerbic comments in either direction that might be forgotten in other situations can result in igniting tensions in NI unnecessarily. Rather than grandstanding, the only way this will be solved will be coming up with yet another "fudge" behind closed doors between negotiators. Constant negative comments really does nothing to resolve the risk of tensions rising in NI.
NI remaining part of the UK, something I don't personally see changing in the next 20 years, does significantly complicate Brexit and the UK-EU relationship. It's incumbent upon politicians from all sides to realise that, and that, due to the complicated history of NI which does make it a unique place within the UK (not the same as Finchley!), a clean break on either side is not in my view possible. Compromises are the only solution. I think far more regular north-south and east-west dialogue is needed, and parties grandstanding by threatening to boycott meetings does no one any favours.
A bit more direct involvement by the UK PM in those east-west meetings with less rhetoric would also help the optics, which are important. Some mutual respect for both traditions in Northern Ireland by politicians across the board would also go a long way. As I said, NI is a form of tinder box. Words matter there, and loose tongues don't help.