It strucked me as odd that no one even mentioned Tom Hagen in this movie. They could have made up an explanation of why he had been replaced with George Hamilton's character.
Anyways, I missed him. Robert Duvall's performance in the first two was impeccable.
They mention him twice in passing. First at the party in the beginning when Michael introduces the Archbishop to Theresa Hagen and Michael Hagen and introduces them as his brother's widow or the son of his late brother. Theresa is also wearing black with a veil, traditional mourning wear which was meant to indicate Tom had died. Second, as the other poster mentioned, when Michael Hagen comes to say goodbye before leaving for the Vatican, Michael talks about the day Michael Hagen was ordained and how his brother didn't live to see it. It's pretty clear they're implying Tom died.
Duvall actually seems to be in the right though. They offered him $1 million. Diane Keaton was getting $1.5 (and Pacino $5 mil). He doesn’t seem like a diva to complain about getting paid less than Diane Keatan