1. The problem I have with Mr. Tompuri's "ethical" approach is not that it is ethical; it is that it's an "ethical" approach in a thread where the explicit question is "what makes a target _legitimate?_". Now, if you asked when it is ethical to target something, then I would be the first to recommend an ethical approach. You asked for legitimacy, that is you asked for the law, you get the law (from me), while ethics (which you get from Mr. Tompuri) is out of place. That's why I say he's obfuscating the issue.
2. You have read the Convention text. Good. That does not make you an expert in international military law, something you will certainly be aware of. Nor am I an expert, but it helps to know the context of previous and subsequent conventions and treaties, customs, precedents, tribunal decisions, and mere military history (BTW, you'll find an ongoing thread on this, the draft Hague Rules for air warfare, in the H&WC part of the forum).
I point this out for several reasons.
2a. Who are you to say that the law was "inadequate"? Mind you, I agree with you that it had been left behind by the technology, but it would be useful to know what other, more experienced people, you know, those who make a living out of international military law, have to say about it. So my humble advice to you is to be not so hasty in your judgement, when it's clear you are facing this issue for the first time and without having any scholarly preparation about it.
2b. You dug out the clause about weapons designed to cause unnecessary suffering. Unfortunately a mere reading of the text isn't enough to understand what this refers to. International laws are _customary_, and this convention is not called "Laws _and customs_ of War on Land" for nothing. The clause you mention, basically and customarily, is only intended to refer to dum-dum rounds, or, when read extensively, to explosive rounds used in anti-personnel purposes. I'm not aware of any other interpretation, which excludes any incendiary devices and the atom bombs. There is a brutal logic to it, because dum-dum rounds had as their _sole, exclusive_ purpose the fact of making wounds more serious, while incendiary devices, which undoubtedly caused sufferings, had as their first purpose the destruction of structures.
2c. The same lack of background knowledge is shown by your preoccupation that the Convention text does not mention open cities. It's true, it doesn't. But while this Convention is meant to organize and set forth existing customs of war, it has no intention to supercede previous treaties and customs. Quite the contrary (see preamble). So open cities, a traditional staple of the customs of war, are still a viable option. The fact that they were declared in several instances during WWII should tell you that the belligerents were well aware of this.
The reason why I often refer to open cities in relation with Art. 25 is that an open city is by definition an undefended city. In other cases, as I explained in my previous message, there may be room for argument. In the case of open cities, there is not, provided the side that declares them complies with its own committment, of course.
2d. The same goes for the issue about Art. 26. Yes, the bombers seldom if ever sent a warning. Unfortunately, there are several loopholes around this. The first one is that several commentators believe that sending bombers over enemy territory, where they could and often would be met by the defense and suffer casualties, is not akin to a standard artillery bombardment, where what you send in enemy territory is artillery rounds; it's more akin to an assault. You are risking your crewmen's lives just like you'd be risking your infantrymen's lives in a ground assault; so, you are exempted from giving the enemy a warning that would help him in taking out your assaulting force. Another loophole is that all of the belligerents issued initial blanket warnings. A third loophole is the "all in his power" clause.
Now before you cry that the law is inadequate because there is a loophole, please stop and think. Many, many laws have loopholes. These laws, in particular, are made by negotiation between decision-makers who represented the sovereign interests of their nations. They wanted the laws to restrict warfare up to the point where that served their country's interests, and no more. If there are loopholes ("as far as possible", "necessity of war" etc.) in these treaties it is because the signatories _wanted_ the loopholes. One could even think that they believed the laws were "adequate" because they did provide loopholes.
3. Now on to your remaining questions.
3a. Of course the presence of enemy troops in any locality automatically makes that locality defended, at least with reference to the kind of offense they can defend against. Otherwise they would forfeit their status as combatants - a military unit that does not defend? If military units in a locality are carrying out tasks that somehow make them non-combatants, they should inform the other side and ask for a local armistice, or cease-fire. Or, if they are not "defending", as soon as one lone enemy soldier shows up armed with a pen-knife, they shall raise a white flag and surrender.
3b. There is the issue of defense vs. offense, but you are wrong in putting it in terms of quantity ("how many troops"). That is totally irrelevant. If Germany chose to defend Dresden with one Staffel of night fighters against a few hundred enemy bombers, so much the worse for Germany. Otherwise, only one-on-one duels would be legitimate, and we know modern warfare is not like that. You can and indeed you should try to maximize your local numerical superiority over the enemy. If they believe they are too outnumbered, they cannot shout "not fair", but they can always surrender. On the contrary, the issue of defense vs. offense can be made with regard to quality. If a city is occupied by ground troops and they have no AA guns, and there are no fighter bases within range, the city would be undefended against air bombardment. But you'll remember I have addressed this point in my previous post, go read again that for the answer.
3c. In theory, yes, you could withdraw all your AA and fighters from your cities and state they are undefended. Unfortunately, that's not the choice that was made, was it? But apart from that, the Convention is not the end of the matter. One should read, among other things, the manuals of the individual armed forces that were meant to explain and implement the laws, for further explanation of these concepts. For instance, an Italian manual stated that the presence of ordnance made a location a military target; the presence of ordnance made defense a possibility, and therefore the location became a legitimate target. And where are you producing your ordnance if not in those cities?