A wider point about ethics in film and not a criticism of your conclusions. Films aren't there to teach ethics. However, the tension that is created between one's personal ethics and those of a character in a film, and Mike is a great example; can be tremendously compelling. Hence, the larger the difference in what you see on screen and what you personally believe the more engaged one can be in a film.
Michael Corleone is compelled by family loyalty to do some horrific acts purely because of the world his family operate in. Thankfully, normal people don't get to have the loyalty tested in such extreme ways, but we are watching a man lose himself by following what to his family may seem the 'honourable' path. Ironically the hell he sinks into means he loses the family he tries to create for himself with Kay. The compelling aspects are that you can easily see the course he follows, it communicates easily. The enormous difference in how he ends up in his world to how things go in the normal world, probably is one reasons that this is such a great and revered work.
Some film IS there to teach ethics, or at least to open up ethical questions or to show an ethical example. I prefer those, personally, although I can certainly see the greatness in a film like the Godfather that is just observing the ethical downfall of another. It just won't make my personal top 10. That's one of the reasons that I have an ethics category in my ratings-- because ethics is an important aspect of film to me. Not the only one, but one important aspect.
Major spoilers in this paragraph:
However, I don't think he is trying to create a family with Kay. Kay, at first, was an open display of how he was going in a different direction than his family. When his family needed him, he had to set Kay aside. The real family he tried to create was in Sicily, with his wife there. When that was destroyed by family business, he fully accepted that he needed to defend his honor. I think that his wife dying is the pivotal aspect of his character-- the murders he does later is not so much out of family honor, but out of revenge for his wife. He became heartless. When he approached Kay, note he didn't try to court her or love her, his proposal was simply a business proposition. He needed a public face of a good citizen with a wife and a child and a religious connection. But in the end, it was all for business. Any time he said he cared about his child or wife, it was with the same tone of voice that he carefully lied to Kay in the last scene.