If Johnny Ola was based on Vincent Alo, then he wasn't a flunky. Alo was a captain in the Genovese family and worked extensively with Meyer Lansky on casinos.

I think that Fredo adequately explained why he sided with Lansky. He felt left out of the real decision making of the family even though he may have been a capo ("Fredo and his men"). If indeed Fredo was stupid as Michael opined about him, then there's the answer. He did not have the Corleone intelligence and subtle intuitiveness of Michael and Vito. He was literal: he only saw what was in front of him. He would have made a terrible chess player.