Despite all that though, he's still miles more competent than the rest of his family (well, George Michael's okay) and the fact that he's mostly separated from them in season 4 is what makes his true colours stand out.
I'm not sure if "competent" is really the best word - the overall theme of the show (which is also the title of the show) depends
on these characters failing to grow or progress as people. Michael may not have tarnished the Bluth name with criminal activities like his parents, but Sudden Valley was still a massive failure, as has been the case with every project he's taken on. What drives Michael is the sense of superiority he feels over his family. He may act as though he hates having to bail them out of their constant drama, but really, he needs
them as much as they need him (and, by extension, each other, which is what I feel season 4 was really all about).
As for George Michael, he definitely became a true Bluth in season 4. The fact that he now has a non-existent company built entirely on a lie pretty much embodies everything the Bluth family ever truly achieved. Think of the fake house in The One Where They Build a House, which looked like a nice house from the outside but had a completely hollow interior - it's the exact same metaphor for the Bluths as FakeBlock. Though I'd have at least thought George Michael would be smart enough to use the real money he'd received for his fake company to hire a bunch of programmers and just actually build the damn software.
I have admittedly only seen the series once so I don't think I'm in any position to try and write a counter-essay, so I'll take your word for it.
Michael's smugness does sound familiar and I actually forgot about the FakeBlock story arc until you mentioned it.
Okay UrL, drop everything you're doing and rewatch the series at least a dozen times.