I actually did a hack job on Godfather II to separate Vito's story and Michael's story. You can watch Vito's story with the Corleone family dinner scene at the end, then The Godfather, then Michael's story. Then, if you really want, you can watch the story about Sofia Coppola and Anthony Garcia engaging in incest while the family whacks a pope. I think it was called Godfather III but I'm not sure.

Now that I've got a better idea of what I'm doing, I considered re-visiting that project to make the edits a zillion times better.
Incidentally, they actually released the TV-reedit of which you speak to laserdisc some years back, just not to DVD. I personally think that the DVD for Godfather II could do this via seamless branching, but it would need for the movie to all be on one disc. The movie was actually split onto two discs.
Yet another money-making idea for Coppola.