In re-watching GFII last night, I noticed that when all hell was breaking loose in Havana after Batista stepped down, that Michael, who was riding in a car to the airport spots Fredo, and gets out of the car and shouts to him to get in the car and fly back with him to the US. During this he says "I'm still your brother!" I wonder if Fredo had taken that ride, and gone back to the US with Mike whether things would have been different for him. Note that when Mike gets back to Nevada, the first thing he asks Tom after asking whether Kay knows he is back, is "Where is my brother?" Then he tells Tom to get word to Fredo that he knows he was misled, etc. This shows Mike was still ambivalent about what to do about Fredo, and it seems he may well have just kept him under a kind of house arrest in the compound.

It is not until Mike discovers that Fredo's treachery extends beyond the initial attempted hit that he decides to kill him. This happens in the famous "Im Smart' I can handle things" scene when Michael allows Fredo to rant on and on, and then asks him whether Fredo knows anything about the Senate investigation, at which point Fredo tells him that the Senate lawyer "belongs to Roth." This tells us that Fredo was still withholding important information from Mike, and it is at that point that Michael's attitude changes. In Havana he is saying "you broke my heart," and "I'm still your brother." Now, however his tone is completly changed. He says "You're nothing to me now, your not a brother, youre not a friend......" In other words because Fredo's betrayal was not just a one time mistake, but an ongoing thing, Michael decided he had no choice but to have him killed. So I think Fredo had a last chance to redeem himself in Havana, but he blew it.