I'm with ya on the hitman and who kills him. I've never understood it. It's the only serious questions that I still have about the movies.
Here's the deal on Pentangeli. It comes from a long word doc that I wrote devoted to the movies and original book. Haven't gotten to the book that came out a year ago yet.
After Michael and the family move to Nevada, Clemenza was boss of the family. The Rosato brothers claimed they were promised 3 Bronx territories. After Clemenza's death, Frank Pentangeli took over his operations and didn't give the Rosatos the territories. Pentangeli said Clemenza hated the Rosatos. Pentangeli claimed the Rosato brothers were taking hostages. Willie Cicci claimed that Clemenza was killed instead of dying of a heart attack.
Frank Pentangeli Capo Frank wants permission from Michael to kill the Rosatos which Michael won't give. Michael is trying to figure out who the traitor is in his family and doesn't want anyone killed so soon after the attempted hit in his bedroom. Michael realizes Frank had nothing to do with it after he surprise visits him in NY but tells Frank not to do anything against the Rosatos.
Johnny Ola told Fredo that Pentangeli wanted a peace meeting with the Rosato brothers and was wondering if Pentangeli’s motives for meeting were sincere. Fredo didn’t know. The Rosatos attacked Pentangeli at the meeting. A cop stumbled on to the scene and the Rosatos ran out. Willie Cicci shoots at the Rosatos and their car kills him. Pentangeli thinks Michael had him set up to be hit by telling him to go to the peace meeting. Otherwise he never turns state's evidence against the family.
Soon after, Pentangeli is picked up on bookmaking, possession, and murder one charges. Pentangeli turned state’s evidence and would be called to testify for the Senate. After his brother Vincenzo Pentangeli showed up at the hearings, he clammed up. Pentangeli would only testify that he had been in olive oil business with Vito Corleone. Of course, Michael had brought Vincenzo to the hearings. Frank knew now that he was getting killed (witness protection or not). Pentangeli was back in FBI custody and committed suicide in exchange for the Corleone family providing financially for Pentangeli‘s relatives.
If you have any more questions -- feel free to ask... I've spent a lot of time on these movies and I have a book about the three movies that fills in some holes.