Tell me if I'm wrong.

But from what I understand of 590. Danzo gave Itachi a choice, join the Uchiha and die with his family or massacre the clan and let Sasuke live.

Why is Danzo letting Sasuke live?

Because he knows nothing?

Danzo already hypothesized that Sasuke would learn the truth
and that they would have to kill him then. Why not just kill him
at the beginning?

I don't want merciful Danzo! I want practical Danzo who nips the problem
in the bud.

This isn't making sense to me. Danzo vs Sasuke seemed pretty clear
that Danzo thought Sasuke should have died during the massacre
but now we get a flashback of the massacre and Danzo has allowed
Itachi to save Sasuke? This smells like a retcon to me!

Is Danzo ruined or what?

I assume Danzo used Sasuke for a clean kill of the Uchiha.

Hiruzen's way would have been to talk, give the Uchiha the Sudenland and then have an all out war, which would have destroyed Konoha. (i.e. Hiruzen=Chamberlain)

Since Danzo's hands were tied as he was foolishly not chosen to be hokage by Tobirama, he needed a go around. He chose Itachi. His carrot was that Sauske could live AND not hate the leaf like an all out war would do even if Sasuke was spared.

Danzo plan was quite brilliant until Itachi told Sasuke to hate more, let Sasuke kill him, and let Tobi has his way with Sasuke. The best laid plans..

But doesn't Danzo already know about Madara and/or Tobi?

Doesn't Danzo know the risk HE poses in telling the truth?

Or is the Uchiha Incident something else from the massacre?

We don't konw that Danzo knows about Tobi/Madara yet

Anyway, it looks pretty clear Danzo was going to betray Itachi and kill Sasuke after he was banished.
Itachi did have to threaten Danzo and return to the village to keep Sasuke alive.

Couldn't Danzo have kept his word and Itachi distrusted him and decided
to threaten Danzo? Then after Itachi brainwashed Sasuke, Danzo knew
that it would be necessary to kill Sasuke as soon as possible?

So you think Danzo was lying when he said Sasuke could live? Why?