I believe Michael had Fabrizio translate to make an impression on Sr. Vitelli, Apollonia's father. First, he wanted to show him that he wasn't just a simple peasant--he was enough of a padrone to have someone in his employ to translate for him. Take a gander at the look that settles on Michael's face--he looks imperious, boss-like, not unlike the look he had in his office in GFII after Senator Geary made the "oily hair" speech. Second, he wanted to reinforce the impression that he was an American, not a Sicilian, which would help smooth over the gaffe he had committed by talking about Sr. Vitelli's daughter.
As for Fanucci: Young Vito surely knew who Fanucci was, and what his reputation was. But young Vito made a habit of keeping quiet, so even his pal Genco couldn't be sure of what he did and didn't know. In a deleted scene, Vito, making a delivery, witnessed two young punks cutting Fanucci's throat.