Quite exactly. Also, in 1914, territorial sovereignty was seen more rigid than what we are used to today.
Whatever they do, in such a case the Netherlands would have to quickly decide where to place their bets. Denying or allowing the Germans to pass - with a very high probability they are in the war afterwards.
Entirely agree.
If they cave in to German demands, they're practically co-belligerents. With German troops and supplies passing through the Netherlands to wage war on the Entente, at the very least the Dutch merchant fleet becomes fair game for Britain and France, and the NEI will end up in British or Japanese hands. A harsh price to pay, and that doesn't even guarantee that the Netherlands proper will remain out of the war.
I don't see what's in it for the Netherlands to accept that the Imperial Army use their railroads and territory to wage war on Belgium, France and Britain.