It's been a while since I've been on, hi everyone. He knew, first off, the Fanucci didn't have the muscle and didn't have the back up. He realized he had no real power and was a fraud, so he used the opportunity to get rid of a threat and take over. Afterall Vito, T&C were in their own little crime syndicate at the time, ripping off dresses and who knows what else. I vaguely remember a line from the book that Fanucci didn't show the right amount of strength and that a real "Don" would never back down as he was. He then realized he was full of it.