Watched GF III again last night...

Connie says, "Poor Fredo, dying in that tragic way, drowning..." So either she doesn't really know, or is in denial to herself about it.

I don't think for one second that Connie is even slightly angry at Michael for killing Carlo. (Even by GF II she never shows any anger about it.)

Carlo was instrumental in the death of Sonny, whom Connie idolized (the youngest sister always looks at the oldest brother as a father figure), Carlo also directly endangered the life of Vito, and to top it all off, Carlo repeatedly beat the $#$# out of Connie (after first cheating on her with half the sluts in NYC).

I think after her first hysterical reaction as seen at the end of GF I, Connie got over Carlo's 'tragic death' (har-de-har-har) very quickly and concluded that everybody (herself inclded) was considerably better off with Carlo dead. By the time of GF II and certainly in GF III I I don't think Connie had even the slightest problem with Michael having whacked Carlo. She knew it had to be done.

In fact, I have little problem believing that if Carlo were still alive in 1979, working as some flunky, chauffeur, etc. for Joey Zasa, 55 years old and alcoholic and whacking Connie around in his spare time just for fun, that Connie wouldn't have hesitated for a second to have him snuffed herself.

(She'da probably told Vincent to make it a double-dipper when he whacked Zasa at the street parade, to make sure they plugged Carlo too. )

I personally thought the character change for Connie in GF III was very intriguing.
Remember people change a lot over 30 years. When we first see Connie she is a very naive, spoiled, pampered brat. By GF III (and needless to say GF IV if it is ever made), that naive brat is gone forever.

She sees a lot of nasty stuff go under the bridge over the next 30 years and for the most part, she knows what's going on. She becomes hard-boiled and ruthless herself and in the end, she becomes perhaps as capable a Don as Michael himself.