Pete, you're right about Fredo's transformation. In the novel Fredo is lauded as a genius when it came to running a hotel. However, the novel also has Vito disparaging his son's new found ability.
By II, Fredo's has been promoted(?) to running a brothel and, apparently, becomes a captain. Doesn't Michael tell Tom that he has power over Fredo and his men?
It's confusing.