Daniel:
Although Lusitania was not a commissioned naval vessel at the time of her sinking, she was built with a government subsidy to Admiralty requirements so that she could be taken over, if needed, and converted to an auxiliary cruiser. In fact, Lusitania was listed as such in the 1914 edition of Jane's Fighting Ships. According to Bailey and Ryan's The Lusitania Disaster, she was also listed as a "Royal Naval Reserve Merchant Cruiser" in the 1914 edition of The Naval Annual. In addition, she was "expressly included in the navy list" that was released by the British Admiralty.
"...because it was carrying weapons or explosives...."
She was carrying small arms. A large number of artillery fuses were raised from Lusitania in 1982. The cargo manifests also clearly state that arms had been loaded in New York.
From the photographic evidence I've seen, 6"-gun mounts were placed on Lusitania fairly late in her career. They do not appear in any pre-1913 photo I have access to. I have never come across an exact date on which they were installed, and photos don't help much to pin the date down since there are only a handful of post 1913-on-deck views. Although she was not carrying weapons that I know of, she was certainly prepared to take them on board if the need arose.
"...and maybe even British troops."
She was carrying a large number of Canadian passengers who were going overseas to enlist, but no, she was not carrying organized troops, as such.
In a strictly technical sense, the Germans were perfectly within their rights to sink Lusitania without warning because, using the British definition at the time, she was carrying contraband. Remember that the British even considered food contraband.
On moral grounds, each of us has to decide for himself what we think was right. Schwieger had two choices: Sink the ship or let her go. The problem for Schwieger, as I see it, is that if he had let the ship reach Liverpool, when he returned to Germany, he would have had serious problems for letting such a large and important target (a potential warship) get by. He chose to sink her, and we all know how that scenario played out.
It's easy with 20/20 hindsight to say that what he did was morally unjustified. Personally, I can't blame Schwieger for his actions. He was in a tough position, and he did what he felt he had to.
Eric Sauder