Well, we are given to believe that Michael has been trying to take the Corleone family legitimate for several years at the time of GF III, so it is not inconceivable that for many of the members of the Commission, especially newer members who came in after 1960s, might have considered Michael's bad-ass reputation as more the stuff of legend than anything else.

By smoking Joey Zasa (or allowing Vincent to do it), he serves notice he can still be brutal when he feels like it.