After China’s muted reception, Koreans greeted the launch of the iPhone Saturday in the style to which Apple (AAPL) has become accustomed. Hundreds of customers lined up, some as long as 26 hours in advance, to pick up the country’s first batch of 1,000 iPhones amid helium-filled balloons, flashing strobe lights and a blaring rockabilly band.

According to the AP, KT Corp. (KTC), the country’s second-largest carrier, had received an estimated 65,000 pre-orders — a number likely to loosen Samsung and LG Electronics’ tight grip on the local mobile phone market. Between them, the two manufacturers (the world’s No. 2 and No. 3 cellphone makers after Nokia), had sold some 400,000 smartphones in Korea at prices considerably higher than they charge in other countries.

In this market, the 32 GB iPhone 3GS — which KT is selling for $317 on a $38 per month two-year contract and giving away free with a $112/mos. contract — is a relative bargain. The Korea Times reports that Samsung has already lowered prices on some models in what looks like the start of a smartphone price war.

Korea, writes iPhonAsia‘s Dan Butterfield, “has a sophisticated group of consumers who are eager to take full advantage of iPhone’s superior user interface and application offerings.”

And Apple was quick to show Koreans the flashy features only the iPhone can offer. Below: An iPhone ad already airing on local TV.

[youtube=http://www.youtube.com/watch?v=mUgUlV9eXmU]

For video footage of the crowds and the countdown, see here.

See also:

• The iPhone is headed to Seoul
• China iPhone launch a ‘disappointment’
• iPhone hardball and soft sell in China

[Follow Philip Elmer-DeWitt on Twitter @philiped]