I'm not really sure if it was better. While I agree with a lot of the posts and appreciate the interesting responses, I feel that it would've been better for Pac to have survived not just for us but for himself.
Yes, Pac probably would've had to serve some time for not fulfilling his community service requirement, but it's not like that would've landed him in jail forever. And regarding the pending rape case, I think Pac's appeal might've had a decent chance at getting him out.
I don't think him beating down Orlando Anderson would've gotten him into much legal trouble. Remember, when questioned, Orlando didn't want to file a report or press charges (because you know that's not how they deal with problems like these). I don't think that your average guy watching the security cameras in a hotel would realize that the guys are from the Death Row entourage (yes, we recognize Pac and Suge, but only because we know it's them), and had Pac not been shot that night, the camera footage wouldn't have been reviewed the way it was, and Suge probably wouldn't have been busted for parole violation either.
In 1996, I'd say American pop culture was beginning to accept Pac. Although like Dante pointed out, he was often a target, that mostly applies to his character between 1991 and 1994 when he was the militant, pro-black, cop-shooting, lawsuit-collecting, potty-mouthed thug accused of sexual assault. During his Death Row days, he was more in control of his public image. Rather than being criticized by all sorts of politicians (Dan Quayle, Bob Dole, etc.), the only major display of disapproval of his music at that point was by DeLores Tucker. Rather than getting his movie roles revoked, he was being given opportunities for roles expanding beyond the typical ghetto characters he brilliantly portrayed in his early career. Even though Gridlock'd and Gang Related weren't box office hits, it gave Pac a chance to show that he could really act, and not just as a crazy nigga with a gun, he could play a humorous musician trying to get clean or a corrupt cop questioning his own methods. Even one of the judges who was sentencing him for something in 1996 said that he believed Pac had a bright future. (I don't remember it exactly, but I thought I read something along those lines in the VIBE biography of Pac.) And while I clearly don't believe Pac was going to run for any elected offices, it's pretty obvious that he was still going to be political in his own way by speaking his mind in his music and during interviews, both of which were highly aired by MTV in 1996. In addition, he had plans of doing good for the community through community centers and various activities targeted at at-risk youths, both of which would look favorable on his part, especially if he were facing a judge for whatever charges. And I think Pac had access to proven, much stronger legal firepower at that point compared to before Death Row.
I think Pac would've calmed down into 1997 as far as his rap beefs went. Pac said it himself in his interview with Angie Martinez that he wanted to just calm down and start fulfilling his heart's ambitions as a family man, but only after his agenda of "riding" was completed. Biggie wasn't interested in perpetuating the beef (to the dismay of his Junior M.A.F.I.A. cronies), Mobb Deep didn't put out any replies until after Pac died, Nas made it clear to Pac that he didn't want beef but alliance rather, Jay-Z was stil up-and-coming (since at the time he was mostly just known for "Ain't No Nigga"). The way things stood, Pac was the victor from a hip-hop standpoint, and even in the event of his enemies responding, Pac would've dug deeper into the depths of his mind and dropped some harder disses along with a few lyrical surprises. Keep in mind that toward the end, Pac began to more effectively utilize lyrical tools while incorporating them with his own raw emotion.
Hopefully I didn't go too far off into a tangent. I'm in my hotel room in Vegas, trying to kick this response out as quickly as possible while finishing my drink before I go out with my buddies and lose some more money at the tables.