How do you know he wasn't killed by Itachi? Just because it wasn't shown doesn't make it false. After getting the eye and Shisui blind something had to be done. First the Uchiha's would ask questions if he came back with no eyes and would probably get the information that Konoha knows about their plans and are trying to stop them. Secondly what kind of life would he have. A former ninja with Hax eye powers, now reduced to a blind man. He might have asked Itachi to kill him so he could die a ninja. All that told us was that Shisui gave him his eye.

I found this episode great. Gave Itachi some clarification. Getting to see what has only been told as stories before. And we didn't know how or even if Itachi teamed up with Tobi to take down the Uchiha's. That was only Itachi's story. And that was when he tried to make Sasuke hate him and Tobi so he wouldn't follow Tobi after his death. Now we got to see how it really was. The flashback also get Itachi's redemption some more credibility. It was one of the weaker parts IMO. This showed some more of what Itachi's choices where. And before we where led to believe that Itachi was supposed to kill everyone but spared his brother. Now we realize that was a major part of why he did it. Because he was allowed to spare him. And why Itachi made Sasuke hate him. Why it was so important to not let him know the truth.

About Kabuto, i wasn't against his flashback. He needed a flashback. Even minor characters get one. And Kabuto have been a major player since the chunin exam. It was his flashback that was kind of boring. Not that he got a flashback to begin with. But maybe that's just me. In the end this cleared up Itachi's story quite nicely.