The Good, the Bad and the Ugly: Part Tuco…?

I think that is a good reason for a sequel. I think that question needs to be answered.

I agree that Blondie put Tuco through that last exercise to discourage him from going after Blondie again. I think Tuco would know better; there are really no more scores to settle; and Blondie has shown himself to be faster on several draws than Tuco. So Tuco would pack up his share of the gold and live nicely as long as it lasted. I like to think he might make an anonymous gift to his brother, but somehow doubt the rift between them can be mended.
It's possible he might end up hanged, but Tuco is very much a survivor, and just might be able to die old in bed. I like to think so, anyway.

I was uncomfortable with glorification of a murderer, and it continues after the movie is over
Darkness lies an inch ahead

I imagine he gets out of there and blows all his money and has to go right back to being a bandit. Eventually gets hung. His character just doesn't seem the type to do anything else. He'd screw up some how.

Also, the reason Blondie goes to Tuco in the town to then go back and kill Angel Eyes is because he still needs to know the cemetery, and Angel Eyes has 4 others to split the loot with.

Disagree about the friends. I think one of the whole reasons Blondie does the noose trick is so he can get away without a confrontation with Tuco. I think the implication is that half wasn't good enough for Tuco and he would have wanted to kill Blondie in order to have it all.
In fact, remember the only reason Blondie is alive at this point is because he knew the name on the grave. Otherwise he'd be a shriveled corpse in the desert.

Im guessing he eventually got himself out of the ropes and took the gold and back tracked to the river where they blew up the bridge earlier to get water and after that probably found his way back to civilization possibly back to the church or a town and lived it up with his new found wealth.
Its crazy that Ive read on other places that some people actually believe he would of just sat out there and died with his hands tied after they spent the whole film showing how savvy he was. I also don't get why some theories are he would go after blondie for the rest of the gold, its kind of established that he and Blonde are "friends" at the point of blowing the bridge because it was Tucos idea to reveal each others secret and he actually gave him the correct information and not a lie so that says something.
Also when Blondie helped him in the showdown against angel eyes gang in that town suggests they had a sort of bond as well. Its also got to mean something that at the end when hes running towards the camera screaming "blonde you know what you are, just a dirty son of a bitch" instead of saying he was a pig like all the other times so I doubt he would of wanted to go after him.

Turns himself in to collect the $3,000, forgetting no one is there to shoot the rope for him, and he dies by hanging, even though he's rich.

In my mind they never crossed paths again, became lazy and died rich.

The first one concerning his brother is a heart-warming story, but somehow I just think that they are always going to be oil-and-water when together.
Tuco has shown himself to be the vengeful sort, so I lean toward your second scenario. Plus that has the added incentive that Tuco could steal Blondie's share of the gold.

If I remember correctly, the start of the film demonstrates the kind of badass Tuco really is.
He is portrayed rather comically throughout the film but I believe he is incredibly capable.
At the beginning of the film there are some men who try to capture/kill Tuco while he is dinning.
And immediately Tuco crashes out the window, still holding his food and we find out he killed all the men (presumably skilled bountyhunters) inside.
Then there's another scene where Tuco assembles his own pistol and shows off his skills to a poor gunshop owner.
That scene showed that Tuco was not only good, he knows his stuff.
Anyways, by far my favorite character in this film so I'm a bit biased.
Don't forget that scene where Tuco shot down that one-armed guy that ambushed him while he was naked and in the tub. Then, he capped it off by saying, "If you're going to shoot, shoot. Don't talk." Wow, I was impressed.
I'm so glad they didn't give that scene away to Clint Eastwood, as would usually (and predictably) be the case.

If I remember correctly, the start of the film demonstrates the kind of badass Tuco really is.
He is portrayed rather comically throughout the film but I believe he is incredibly capable.
At the beginning of the film there are some men who try to capture/kill Tuco while he is dinning.
And immediately Tuco crashes out the window, still holding his food and we find out he killed all the men (presumably skilled bountyhunters) inside.
Then there's another scene where Tuco assembles his own pistol and shows off his skills to a poor gunshop owner.
That scene showed that Tuco was not only good, he knows his stuff.
Anyways, by far my favorite character in this film so I'm a bit biased.
Thumbs Up, Thumbs Down and a Wagging Finger of Shame

I thought he got a plane and helped some other people capture wild horses to sell for dog food. (Sorry, I couldn't help it.)

I've never bought that Tuco was the weakest of the three main characters. Sure, he's not on the level of Blondie and Angel Eyes, but he's only inferior to them the same way a rattlesnake is inferior to a cobra. A rattlesnake may be less lethal than a cobra, but the rattlesnake is still deadly as ANYBODY who made the mistake of both crossing and underestimating Tuco like Elam and Corporal Wallace found out.