I don't think that Puzo/FFC giving Altobello the title of "Don" necessarily meant that he was a boss at all. It could have just been an affectionate or diplomatic gesture by Michael. Don't forget, in Part II, Young Vito initially addresses Signor Roberto as "Don Roberto." And in that case he was only being tactful.

The term could easily have been used by Michael on Altobello as a matter of diplomacy. Same way he told Roth, "there's much I can learn from you," he may have just been buttering the old guy up.