Michael already had reached the nadir of heartlessness in GFII.

The final scene is very touching, with a flashback to when everything was different/better. It's a great contrast between a young, idealistic Michael surrounded by family and a lonely, cruel Michael in Nevada.

This sets the stage for the regretful Michael of GFIII. Having him be MORE evil would have been sensationalistic and boring.

The only thing that bothered me a little about Michael's character when I first saw GFIII was his playfulness, which I didn't feel was ever shown, even in the beginning of the Trilogy. This part of Michael's character was later revealed in the deleted scenes with Kay in the hotel.