And he definitely wasn't a retard or an impressionable dumbass. He was well aware of what he was doing and he was informing on both Konoha and the Uchiha clan and could have gone along with either side. As double agents usually do Itachi ended up having more information and a better perspective on things than either side did, that Madara was still alive and in the village is a good example. Itachi was pivotal during that time and I would think that whichever side he chose would have won, he just ended up choosing the path of least bloodsehd. Like Madara said the guy did all these horrible things and in the end he still got what he wanted and he died with a smile on his face, compare that to how Jiraiya died.
Just to clarify there was no root at that time. What they said was that Danzou was the leader of the Anbu so he had as much power as the hokage's currently have. Root was created sometime afterward. Lastly I don't think anything is wrong with the third but the guy's hands were completely tied. There was absolutely nothing he could do. If it is as Madara said and there was systemic hate towards and suspicion about the Uchiha's that spanned generations there was nothing he would be able to do to change peoples minds about the Uchihas. Besides that he wasn't in control of the Anbu, Danzou was, and I suppose the third and the elders together would have been able to stop Danzou but the elders sided with Danzou so there was no hope of doing that.
Then there is the fact that they knew the Uchihas were going to revolt and like Madara said as powerful as the leaf was there was nothing they would have been able to do about an army of sharingans. I mean can you imagine that. So if the leaf didn't strike first, the Uchihas would've and then the leaf would have been wiped out.
As for the kage position being more of a puppet-figure head thats what I thought when I saw how things worked when the elders and Danzou confronted Tsunade. Just look at what they did with Gaara. As powerful as the third was he was only one man and if the elders and Danzou decided they were going to remove him I highly doubt there was anything he could have done about it. Thats how politics works.
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