Dharma is messin' with Michael's head, just like Hoax-Henry did with Jack and Locke. Dharma knows the Losties have H-H, They tell Mikey that If he gets their guy back for them they will give Walt back (lies of course) But, Mikey being the desprate daddy who was willing to knock out Locke and, Lock both Jack and John away believes them. He has to shoot A.L. but, he's visibly shook up after shooting Libby. She was just a wittness and sadly had to go. The shot to his arm was to cover up the killings. I think Dharma thought that bit up. I really question the idea that Michael came up with any of this. He's way to willing to do anything to get Walt back but, he's just to quick to act. It wasn't that long ago he was running through the trees screaming out Walt's name.He's just a pawn in Dharma's game.

__________________
Hope is a very dangerous thing to lose. - Sayid

I do what my Rice Krispies tell me to. - Anonymous