I have posted this before, but IMHO Connie is the person most transformed in the trilogy, and for what it is worth she carries anything redeemable about III.

From the boathouse scene in II, Connie tells Michael that she came to terms with Carlo's killing, telling Michael that he was
being strong "like papa," and that her whoring around was her immature way of punishing him. Then she tells him "you need me" and that she would "take care of him." Michael knew he needed her, and she is the only figure he seems to respect in the rest of the trilogy. He lets her get away with allowing Kay to see her children, and when she is critical of him, he accepts it.

She engineers Vincent's rise in the family, she orders the death of Zasa causing Michael to reinforce his authority ---"I command this family" and at the end of III she actually makes her bones.

As for the scene TB mentions, I am one who believes she knew Michael killed Fredo. Assuming Anthony knew it, Kay knew it, and Mary wanted to believe he didnt kill his brother, its a pretty easy conclusion that Connie knew. If you take her statement about Fredo drowning in context there is little doubt.

There she is giving Michael an insulin shot and he is telling her he went to confession. She finds it strange that Michael would confess to "a stranger" and Michael tells her it was "the man" who he believed to be a "real priest." Connie has to know Michael's greatest sin was fratricide, but loyal sister and care giver that she is, she tells Michael what he wants to hear...she thinks Fredo drowned. I do not think she would have mentioned this on the heels of learning that Michael had likely confessed this sin that very day. She was
soothing Michael, and one could argue advancing her campaign to have Michael replaced by Vincent.

If anything Connie saw that Michael was "slippin" and the family needed new blood. In that sense at the end of the day it was Connie manipulating the manipulator.