I have never seen any evidence that the Lusitania was carrying war materials; the onboard explosions which made her sinking so rapid can best be accounted for by the initial impact filling her largely empty coal bunkers with coal dust; when the coal dust in turn exploded the mixture was like a primitive Fuel-Air Explosive.
While not perhaps a war crime, the sinking of the Lusitania was an act of terrorism in that it was declared as a specific target, in an effort to deter passengers.
The unrestricted submarine warfare seemed to bring on a new level of unpleasantness; it is understandable to try and sink ships from ambush if they may be armed, but to capture and execute a ship's captain for attempting to sink the submarine which is shooting at him is not.
http://southernlife.org.uk/fryatt.htm