What he did wrong
He didn't use kotoamatsukami on Itachi.I wrote somewhere else about how he could have controlled Itachi during the Uchiha clan massacre but i was obviously wrong.Orochimaru transplanted him the eyes and Senju dna after Itachis mission so although he had Shisuis eye at the time he couldn't have used it.But...He could have used it on Itachi when he visited the village with Kishame.He wpould have disposed both Sasuke and Itachi and also take his mangekyos.Moreover he could have used it on Hiruzen and the other elders and practically control the entire village.Not to mention that he could control some,if not all,of the other Kages if he was lucky...Like what Obito did to the Mizukage with his normal sharingan.Now that i think of it Danzo could have silently achieved world domination.His jutsu was way too powerful and the fact that he didn't use it to achieve any of that creates a major plot hole.
But his KA use was crappy. It didn't get him far with Mifune and Ao noticed it. Konoha is where the Hyuuga reside, that wouldn't help if Danzo tried to control those people w/ KA considering sooner or later people would notice.