Agreed, Oli.
Michael's conduct toward Fredo - allowing him to live as long as Mama does, giving him access to the compound, etc. - shows clearly that Michael does not view Fredo as a threat.
Michael killed him out of rage and retribution, not as a calculated self-defense mechanism. This is affirmed in GFIII during the confession to Lamberto, when he explains his murder of Fredo by saying "He injured me."
Michael killed Fredo nevertheless out of principle. He already gave Neri the signal that Fredo was a dead man walking. If he did change his mind it could have been interpretated as a sign of weakness. Or maybe Michael thought he had to make an example to others in his organisation; "it doesn't matter who you are, if you betray me, you get killed".
