One point you might want to consider, Lost Don: the scene you object to makes a neat parallel to Fredo's earlier betrayal, when he took Moe Green's side against Michael. In that scene, Moe revealed that Fredo was "banging cocktail waitresses two at a time." In Havana, Michael asks Fredo to "show my guests a good time." He takes them to the Superman sex show. I think FFC was trying to show us that Fredo was a degenerate as well as a traitor. And I don't think it's a coincidence that Fredo also operated the whorehouse where the prostitute was murdered.