Woltz, I agree with everything you posted. I'd like to take it a step farther:

I think if Vito'd had his way, Michael would have finished college and gotten a law degree. Then Michael would run for Congress--probably from an address of convenience in Vito's old neighborhood in Little Italy, where the Corleone name was still magic. He'd win easily. From there, it'd be "Senator Corleone...Governor Corleone..." Then Michael, using Vito's money and influence, would work to legalize gambling at either the national or state level, thereby achieving the legitimacy that Vito wanted.

Of course, all this would be contingent on Michael accepting Vito's guidance--a big "if," for the reasons you point out. But, Michael might have mellowed toward Vito over time, especially if he saw himself as helping to legitimize the family instead of becoming a Mafioso. I base that in part on that whole rationale he gave Kay when he was wooing her in New Hampshire ("My father is no different than other powerful men with responsibility for others..."), and partly because I think he developed a strong affinity for power.

Where was Sonny in Vito's plan? I think Sonny would be the head of an ever-diminishing "olive oil business," and providing strong-arm for his brother when needed. This might have led to an interesting sub-plot: Sonny (like Fredo), resentful about his diminished role vis-a-vis his younger brother, leading to conflict and possible violence.