Logic is on plaw's side, dt. Michael had a long history by that time of never giving an enemy or a traitor a pass, no matter what. He wanted Fredo close to him because he wanted to pump him for as much info as he could get. But that kiss at the party was the kiss of death.
Still, some of us here wonder if Fredo's rant in the boathouse may have sealed his fate. Fredo showed Michael the depth of his resentment and rage. It's hard to blame Michael for concluding that his brother, who nearly got him killed once, would be a danger to him as long as he was alive.