He didn't do anything versus pain because of plot.
Thats the reason Team Gai was away when Pain came and Danzo did not fight Because he would have solo'd Pain and Gai would have also. Its all plot man. Plus you cannot call Danzo evil, he is the least evil of most characters. Everything he did was to protect his village and its people 100%. He wanted to leave no room for error and doubt so he made sure the village got protected his way remember: If you want something done right you have to do it yourself. His love for the village was greater than anyone's, so much that he created an entire new branch of government(Root) run directly by him to do the dirty work that needed to be done so that the village would prosper. Everyone needs someone like that and Danzo did the job perfectly.
