She was, in fact, carrying war materials.
A hidden batch of Remington .303.
The critical mistake in staging a Pearl Harbor was galvanizing resolve. The Isolationists were strong in America in the early years, not to mention a smaller element of Fascist and Socialist sympathizers. Democracies lose in war often when they are the antagonists and although America certainly would have been pushed into conflict eventually as the Tarawa’s stacked up there’d be a growing movement to call a truce.
I think the Philippines are a nonissue, yeah they’re on the trade routes with the oil rich Dutch East Indies, but Japan had plenty of bases along it as well, and the Philippines were an untenable strategic outpost for America.
Yes: (wiki)*Lusitania was in fact carrying small arms ammunition, which would not have been explosive. Included in this cargo were 4,200,000 rounds of Remington 0.303 rifle cartridges, 1250 cases of 3 inch (76 mm) fragmentation shells, and eighteen cases of fuses. *
Not only that, she was listed in Janes as a Armed Merchant Cruiser, and had been prepared for conversion to such a warship. She was never actually converted however, and she might never have been. But Lusitania did have gun mounts, even if no guns had been placed. Her sister-ship became a troop-transport and was thus a 100% legit target.
Lusitania was also disquised:*However, the Lusitania underwent many changes, several of them were a response to the war [8]:
The Lusitania’s name was painted out to protect her identity from Germans.
The compass platform was added at the top of the bridge.
The Lusitania’s funnels were painted all black instead of red with two or three narrow black bands and black top, to protect her identity from the Germans.
Another compass platform was added between first and second funnels.
A pair of luggage cranes were added on the aft deckhouse.
The last change on the Lusitania, and once again to confuse the Germans about her identity, the Lusitania flew no flags during her last voyage. *
There’s no legit reason to do this for a passenger ship.