I agree with what you both said. Another wrinkle could be that with the Don in charge , Sonny doesn't get whacked eventually, which means that Michael is still free to pursue his non-criminal dreams.

Or even if Michael does take over later somehow, Fredo has more self-confidence/self-esteem as a result of his actions and is not jealous of Michael or the weak link among the brothers.

Or maybe it's even Fredo, not Sonny, who goes ballistic and starts hunting down Sollozzo and his crew. It would have been an interesting spin if it were Fredo who was really the Crouching Moron Hidden Badass smile

"When the snows fall and the white winds blow, the lone wolf dies but the pack survives."
Winter is Coming

Now this is the Law of the Jungle—as old and as true as the sky; And the wolf that shall keep it may prosper, but the wolf that shall break it must die.
As the creeper that girdles the tree-trunk, the Law runneth forward and back; For the strength of the Pack is the Wolf, and the strength of the Wolf is the Pack.