The constitution and case law are rock-solid against what you think "should" be. The only way a person born subject to the jurisdiction of a foreign country becomes a US citizen is by statute, and Congress can just not pass a statute conferring citizenship to a person born abroad of citizen parents.
I cite Rogers v. Bellei for that proposition. It's not the only case, but it's a good one because Bellei was born abroad of a citizen mother and alien father, just like Cruz. 9 out of 9 justices agree that Bellei's citizenship was a form of naturalization.
... citizenship to this plaintiff was fully deniable. The proper emphasis is on what the statute permits him to gain from the possible starting point of noncitizenship, not on what he claims to lose from the possible starting point of full citizenship to which he has no constitutional right in the first place.This is settled law.
If Vice President Arthur was born in Canada he’s not eligible https://vermonthistory.org/journal/misc/MysteryOfChester.pdf
“This is settled law.”
You quote a 1971 ruling. Just like the court overturned what appeared to be an anti-gay marriage stance from around the same time, so they can easily write this away. I agree that Cruz should get some clarity on this, but there is great controversy over this.
Additionally, Mr. Bellei never fulfilled the residency clause, while Mr. Cruz did. There is an interesting post here from someone from the ACLU no less that came to quite a different conclusion than you:
http://www.washingtontimes.com/news/2016/jan/13/susan-carleson-should-settle-cruz-eligibility-trum/
I don’t want to fight but it’s clear that this is not settled law, but something that needs more clarity now.