Well, without a discussion of morals, we are left to discuss whether Michael's actions were simply pursuant to efficient and effective management of an organized crime enterprise. In that context, his "firing, do not rehire" of Fredo was a good business decision.
This was my only point (and it's no rationalization, in the usual sense of the term, i.e. trying to duck the real hard issues). And is this not the meaning of the phrase, "It's not personal, it's strictly business"? No one who cannot bracket off moral concerns from the affairs of this type of business is fit to be at the helm. And let's not kid ourselves, the same is true in the corporate world, which is why there are all kinds of books out there that explicitly try to "translate" Machiavelli's precepts in The Prince into precepts for use in the "legitimate" business world. And speaking of Machiavelli, this foundational precept of bracketing morality out of the decision process -- foundational not only for success but also for mere survival -- is also at the core of "legitimate" politics, especially international politics. I'm reminded of Michael's remark in GFIII (speaking to B.J. about Lamberto), that it's dangerous to be a good man (if you're in a position of influence). This is right out of Machiavelli (chapter 15 of the Prince), and nothing, in my opinion, is more true.