Why would he want to align himself with someone nobody respected and who most considered a joke in Little Carmine?

I would think aligning yourself with someone who as you put it as "Peaceful and Stupid" won't get you very far in that life.

He already had a great working relationship with Johnny Sac who had the respect and power in New York.

It may have been a mistake to remain neutral but siding with Little Carmine would have been a terrible move. They both would be fixing wet t-shirt contests.