There are many conflicting reports that the German U-20 didn't realise it was the Lusitania until after the torpedo had been fired.
When the skipper of the U-20 Walther Schwieger ordered a check on the vessel, someone called back that it was either the 'Lusitania or Mauretania, both are armed cruisers used for trooping.'
Another report is that one man didn't realise it was the Lusitania until he looked through the periscope and saw the name written in gold on the stern. At that point, he was heard to remark 'Mein Gott! It's the Lusitania'. The name on the stern however was painted over, the couldn't possibly have been able to see it.
Another thing is that a German U boat waited outside Liverpool for the Lusitania in March of 1915 - 2 months before she was sunk.
Finally, the Lusitania was, in my opinion, carrying a certain amount of ammunition destined for Britain from America. We can take this into account as a reason for the sinking, but with 1,959 civilians aboard, is it really worth the risk of killing them?
Many ships have survived torpedo attacks. Carpathia sank with three slamming into her side. Justicia went down after about 7 hits. Lusitania was an English ship, and would appear large enough to survive one torpedo and evacuate the people aboard before sinking her.
Lusitania was an unfortunate victim of war. Used for propaganda on both sides, she fueled hatred between Britain and the German Empire, and while in my mind, the German U-Boat had no right to sink it, the people aboard were given sufficient warning before going aboard.
Yes, in my opinion Lusitania was a legitimate target. Using the 1914 British definition, most of her cargo was contraband. Contraband was defined two ways -- absolute contraband, as in munitions, and conditional contraband, such as food.
In March, 1915, the British decided that food was to be considered absolute contraband -- on par with munitions. According to the British definition, technically Lusitania could have been sunk even if she carried no munitions because food was a prohibited cargo.
I find it very hard to believe that an experienced submarine captain like Schwieger didn't know -- or at least strongly suspect -- that his target was Lusitania. The story about Pilot Lanz saying to Schwieger that "it was either the 'Lusitania or Mauretania, both are armed cruisers used for trooping" is found in Colin Simpson's book. A brief conversation like that may have happened, but even if it did, no period confirmation of it has ever been found. It’s just another one of those things Simpson invented for a better story.
The story about someone saying "Mein Gott, das ist ja die Lusitania" is hearsay several times removed. Someone who said he heard it from a U-20 crew member told someone who told someone. Hardly credible evidence.
"is it really worth the risk of killing them?"
To the British government in 1915, the answer could only be "yes."
"the German U-Boat had no right to sink it"
The Germans were perfectly justified in sinking Lusitania. In fact, the British brought the problem on themselves by blockading Germany and preventing food and medical supplies from reaching the civilian population. Hundreds of thousands of innocent German civilians were slowly starving as a result of the British "hunger" blockade. What was Germany supposed to do? She was like a dog backed into a corner. She could either strike back or be
Put yourself in Schwieger's position. Hundreds of thousands of his countrymen were starving. He had strict orders to sink all enemy ships. If he had let Lusitania get by him and word got back to his superiors, he would no doubt have faced a court martial. On May 6, just the day before, it had taken two torpedoes and an hour and twenty minutes to sink a relatively small vessel of less than 6,000 tons. Can anyone seriously suggest that there was any way for him to know that a single torpedo would sink one of Britain's largest liners in eighteen minutes?
Under the circumstances, he did the only thing he could do. He fired the torpedo.
i would like to point out that it is quite possible that Schwieger didnt know it was lusitania until after the torpedo struck, remember that from looking through those small periscopes it was often hard for a U boat captain or officer to recognise to the exact ship he was attacking. a good case being the U9 attack on 3 british cruisers (refer to Raiders of the Deep, Lowell Thomas, if not that than Thomas Lowell, excuse my memory please). it often rumored that lusitania had mistaken the lusitania for a different british 4 stacker. though considering that the lusitania was flying no flag when she was sunk and carrying contraband as Eric Sauder pointed out, i would say lusitania was a legitimate target, and even more legitimate a target if she tried to desguise herself w/ black funnels instead of company colors and a painted out name as suggested Ballard & Dunmore and also Hickey and Smith, anyway the desguise would have never worked as there were no neutural ships w/ 4 funnels. Great Britain had five four stackers at the time, germany had 4, and france 1.