You clearly didn't read the statute:
Sec. 303. [8 U.S.C. 1403] Persons born in the Canal Zone or the Republic of Panama on or after February 26, 1904
(b) Any person born in the Republic of Panama on or after February 26, 1904, and whether before or after the effective date of this Act, whose father or mother or both at the time of the birth of such person was or is a citizen of the United States employed by the Government of the United States or by the Panama Railroad Company, or its successor in title, is declared to be a citizen of the United States.
On or after February 26, 1904.
And that statute is a statute, not a theory.
Looks like you win that. The statute to which I had reference was more specific directed to the Canal Zone or to a parent serving in the Canal Zone. Wonder why in the face of the statute you cite, they thought that was necessary.