Had Fredo been allowed to live in exile,I don't think he would have posed a threat to Mike. He would have little, if any info to give out,and would be a pariah to everyone except maybe Connie. He could fume and fester the rest of his life about bein' stepped over,but Mike's antenna would forever be up,and I doubt Fredo would have a second chance to strike. Fredo screwed up the one chance he did get,and he would get older,not "smahtah".