Had Duvall signed on for GFIII, the plot probably would have been very different, no doubt better. A possibility: Continuation of the theme we saw at the end of GFII (Michael increasingly doubtful of Hagen's value; Neri ever-more ambitious, especially with Rocco out of the way; Hagen having a mistress and other job offers). Intriguing stuff.
The long lapse between II and III: FFC had other projects to pursue, and didn't want to be defined solely by the GF films. This was the era of "One From the Heart," "Apocalypse Now," etc. He went boom and bust, his son Gio died--lots of distractions. Paramount persisted in wanting a GFIII, and finally, with the promise of more money and more control over the film, FFC agreed.