I agree with Kraco about Danzo making a crappy Hokage, as I've said as well. What I also said was that he was there to take care of all the shit that the idealistic Hokage (Sarutobi) couldn't deal with, such as the Uchiha incident.

Letting Sasuke live was actually a requirement in making Itachi act. Recall that he wanted to settle this before the outside world knew about Konoha's problem and launched an attack. His leverage over Itachi was that by killing the Uchiha he could save lives.. but most importantly for him the life of his brother. As Itachi left, he warned that if Danzo hurt Konoha or his brother he'd reveal everything.

Quote Originally Posted by DE
On top of that, there's the fact that all of the asshole ninja problems that "require" asshole ninja solutions were caused by ninjas being assholes in the first place.
Basically, the whole hate goes in circles thing. Naruto tries to take all the hate on by himself. How many other people can do such a thing and succeed?

And for all those people who can't, what are they supposed to do? Let the hate from others destroy them, or postphone it till later? Danzo had the right idea here by killing everybody in the Uchiha, even women and children. The only catch was that in order for it to happen he had to let Sasuke live. It wasn't as if he chose this way knowing it'd breed hate 10 years later. Tobi was an unknown.