Literal meaning? Neither. It.begs the question, regarding th children of children of Americans born outsid3 the county.it makes an assumption. But the BIG assumption is that it is binary.
And since Cruz or any other person born to a US citiz3n outside the US are not naturalized, they are either the other kind of citizen or they are not citizens at all.
You assume the conclusion. Case law says the opposite of what you do.
The way US law works, is one starts with the constitution. It is a primary reference. If the application of the constitution isn't clear, then one looks to case law, SCOTUS case law also a primary source. There are many SCOTUS cases that say a person born abroad, if they are a citizen (and this includes those "at birth" with no citizenship test, no naturalization ceremony, and no oath), they are a citizen by naturalization.
The framework you are using is made up out of thin air. It is cited by multiple secondary and tertiary authorities, but if you compare what the secondary authority says about the primary authority, you find that the secondary authority is mistaken about what the primary authority actually says.