I also found the Jules-and-Lucy stuff gratuitous and uninteresting. I think Puzo included it because he wanted a way to lead up to describing Lucy's operation. Puzo had a disturbing tendency to belabor erudition he picked up (attest the endless ins and outs of the movie business in "Last Don"). Maybe he read a description of that operation somewhere (or had a wife or girlfriend who had the operation), and felt the need to let all of us know what he knew.
The Lucy/Jules relationship was near-superfluous. On the other hand, it did provide a way to show that the family took care of Lucy even though she was just a goomad. And it gave Michael an opportunity to get off one of his best Don-like lines about loyalty when Jules balks over getting more involved with Michael ("That was a stupid thing to say. You should know that I'd never ask you to do anything you couldn't do. But so what if I did? When you were down, did anyone else lift a finger to help you?", or something like that).