Good answers, all! My view:

1. Barzini didn't "break the peace." The agreement the Dons made with Vito was that the war would end, no attempts would be made on Michael's life in his return from Sicily, and Vito would provide police/political protection for the drugs trade in the East. Period. Barzini horning in on Tessio's territory wasn't part of that agreement. Though they could have reacted to Barzini's incursions (either with force or diplomacy), Vito and Michael didn't because they were playing weak-and-meek.

2. The novel clearly states that Michael was planning to go ahead with The Great Massacre while Vito was alive--even telling Vito that he must have no part in it, and that Michael would leave the family and go his own way if Vito tried to interfere. Perhaps he meant by that to protect Vito's personal integrity--i.e., Vito didn't break the peace, Michael did, not that it would matter to anyone but Vito. Luckily we were spared this ridiculous "moral" distinction by circumstance: Vito died and Barzini, with Tessio, planned to whack Michael. So, it was kill or be killed.