We will never know for sure, but I think if Vito wanted Costello dead, Costello would have been dead. Chin may not have been some assassin like in the movies, but he was an experienced criminal by that time in his life. He was a gangster who was willing to point a gun at another man and pull the trigger. How hard would it have been for him to put one or two more in Costello's head? I am thinking that Vito may have thought that an alive but scared boss stepping down was an easier situation to explain to the Commission.