Vito did survive, then acceded to the drug deal as a STRATEGY to bring Michael home and continue with his long range plan for revenge. But, had he not been injured and had he not had to concern himself with Michael's return and had Sonny not been killed, Vito would have eventually exercised his huge intelligence to recognize that he really had to participate to at least some extent in the drug trade, that it was the wave of the future.

By the way, according to the novel, it is Vito not Mike that tells Tom to put together a group to give him a report on the possibilities out in Neveda.