No, asking for a clarification. Read a long time ago some historians considered her a valid target since she carried ammo, but others argued under cruiser rules, she could. Have you heard anything about this?
I think it's a misunderstanding of the concept of a blockade as it was executed at the time. Basically:
1) As a blockading power with a legally established blockade, you can stop
any ship that is not in a nationally escorted neutral convoy.
2) If the ship you have stopped is carrying contraband (and ammunition does count), you can take it as a prize and send it into port for the prize courts.
3) If you are unable to do this, then you are permitted to take the ship's papers off as proof she is carrying contraband, either take the crew/passengers off onto your own ship or put them into the boats with the reasonable expectation on the part of the crew that they will be able to safely reach land, and then sink the ship.
4) If a ship is refusing to stop for the blockaders despite notification, it is permitted to sink them as a blockade runner (though you must have a legal blockade established).
There's also rules on commerce raiding, and as I recall it was basically the same kind of thing but only applied to enemy ships (and with no requirement of contraband being established).
Under international law as it was at the time, it would be legal to stop the
Lusitania and board her to establish that she was carrying contraband. This being done, the crew and passengers would then be put into boats or otherwise conveyed to shore, and the ship could be sunk - it would then basically be a matter for the courts, and if the Germans were found to be in the wrong then compensation would be paid. The key point here is that a ship in the exercise of normal commerce is risking
property but that there is no risk of
life.
Sinking a ship without warning by torpedo? Very illegal. It doesn't matter that Q-ships existed, even - the Q-ship is a legitimate target, yes, but that doesn't mean you can kill everyone because they
might be a Q-ship.
The thing which makes it all murky is that Germany more or less
got away with massive submarine warfare in WW1, and so in WW2 everyone started doing it because it was obvious that it was much more effective (and no-one wanted to be the one giving up an advantage without any countervailing disadvantage attached to it).