I've also tried to argue that the boathouse conversation was the moment at which Michael knew he had to kill Fredo.
One reason why I think this has to do with Michael's comment to Neri immediately after that conversation. Michael's remark that he doesn't want anything to happen to Fredo while momma is still alive seems to makes sense only if we assume that there was no prior order or implicit understanding between Neri and Michael, that Fredo had to be killed.
As for the business about whether Michael should have had Fredo killed, I say yes, absolutely. In the boathouse conversation Fredo reveals his personal ambition ("there was something in it for me, on my own"), his envy of Michael's power, and the resentment that comes with the opinion that that power should have been his, not his kid brother's. All of these sentiments are a potential danger to Michael. Fredo may have been duped about it being a hit, but he was consciously acting treacherously and for the reasons that traitors are traitors: personal gain, etc. In this light the difference between Tessio and Fredo is only a matter of degree -- same genus, different species.
But, of course, such rationalizations as yours completely ignore the moral implications of murder and view it simply as the culmination of a decision-making process. Michael chose to be in the business that he was in which was typically characterized by murder and mayhem.
It's interesting that when he had his conversation with his mother, he didn't ask her about the morality of what he had done, was doing, or would do, but rather about HIS losing his family, the potential injury to himself. Thus, his depravity is manifestly illustrated.
