At this point, we can only assume. We have no idea the story Madara is spouting... *grumbles*

Yes. To see that Itachi caused such a cascade of effects due to actions that weren't caused by his own thoughts or Madara's [though we have to wait until the end of the flashback to see if that's the case] is amusing in a way. No matter how it happened, I think he was still manipulated in some way.

And don't get me wrong... I like Itachi as a douchebag. XD I want him to stay that way, too. >_>