Which is the hing that was keeping Marlo around in the first place. He'd gone blow for blow with Avon and surivived. So when the Co-Op had to deal with an outside threat (The NYers setting up their "Wal-Mart" franchises), Joe did what he needed to do to get the dude with the best muscle on his team.

Introducing Marlo to the Greeks was probably a mistake, but Joe did know he fucked up by setting in motion the set of circumstances that got that whole shipment jacked by Omar. If it was just Marlo that got jacked (like Joe thought), he could've just chalked it up to being part of the game and called it a day. And, bear in mind, Vondas did intially tell Marlo to fuck off, they trusted Joe, and would only deal with him.

Showing Marlo every other trick in the book was definitely dumb, as was going to bat for Cheese so many times. But in the end, Joe made it waaaaaaaaaaaaaaay past his life expectancy by staying below the radar and keeping it boring for the cops.