Brillant post, TB, even by your standards.
However, I do not entirely agree with your conclusions.
The main issue I have is with #2. I do not believe that Michael could have returned to normal life after killing two men. Once McCluskey was killed, the cops cracked down and the war was on. It strains credulity to think the Michael, who instigated the war, would be considered a civilian any longer. Even if Vito's peace kept him safe for a while, I feel Michael would always be considered a member of the family from that time forward - fair game for the next time bad blood erupts.
But even if you feel he would be safe from Mafia retribution, what kind of life would Michael have had in the legitimate world after being accused of killing two men? The Bocacchio confession would clear him legally, but not in the court of public opinion. While it's possible that the son of a Mafia don could be elected Senator or Governor, the son of a Mafia don suspected in two murders would never have been. The only jobs he could have gotten with enough power to satisfy him would have been connected to the illegitimate world.
I agree that Michael chose the life he led, and that he had many chances to get out. However, once he pulled the trigger his previous life was over.