TB, you're probably right about the abortion since Kay would have had it early in her pregnancy. Howevere, Tony would have found out about Fredo from any number of rumor sources just like Mary did (her conversation with Vinny.) Who knows where or how such rumors originate, but I don't think Kay was a source.
I could see her being the source. If he had heard it from someone else, he would have been much less likely to accept it at face value. Even if he had heard it from multiple sources, he could have discounted it as a common rumor.
