Killing him was probably extreme, but something had to be done. If Fredo was allowed to go into business for himself without consequence, what message does that send to the rest of the Corleone family?
...and to Michael's enemies. Michael always felt he had to communicate to foes that no one gets a pass from Michael Corleone. That was one of the reasons he had to get rid of Pentangeli and Roth, even though they seemed to be defeated.
You hit it on the head. To me, Michael's whole mindset is best summed up in the line he delivers to Tom in II. "I don't feel I have to wipe everybody out,Tom. Just my enemies". That's it in a nutshell. Mike didn't concern himself with what Fredo's motivation was,or whether he would or wouldn't be a liability in the future. By dealing with Roth,Fredo was now an enemy.
