I think he still goes through with it. Based on what we see it Part 3, it seemed like killing Fredo was rock bottom for Michael, and it was this act that made him realize how evil he had become and he started to try to be a decent person. If their mother hadn't died so soon, I think he continues to be the soulless evil Don who continued to isolate himself from anyone who ever loved him, and perhaps when the day finally came, he would still realize the awfulness of it, however it would be to late for him to change anything about his life.
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