What immediately drops out of them is that kids of diplomats must return physically to the US for 5 years to be able to pass on their citizenship to their progeny.
These are good rules, not bad. The point of having birthright citizenship is that we don't rely on a fuzzy, nationalist, often-slight-racist notion of "Americanness" or "American Blood" to define our citizenry. All persons born in the United States are citizens of the United States, easy peasy.
But then you need to close the loopholes around people who clearly haven't renounced citizenship and don't want to but still find themselves pregnant in foreign countries such that they don't need to make emergency trips back to the homeland. And that gets a little complicated because you need to distinguish them from actual expatriots in a fair way.
If they are born abroad and then marry a non-citizen or a foreign-born citizen, then yes, it can get tricky. The safest is to return to the US to give birth, at which point there is no issue with passing on citizenship (for now, at least). Otherwise, it's possible that their child is stateless (happened to friends of mine, it took 2 years for them to get US citizenship for their child, who was otherwise stateless).
Did the kid actually have to acquire US citizenship via naturalization or did it just take 2 years to prove that they were a citizen? Those two cases are really different.
Even if you don’t have confirmation and proof that you are a citizen (eg by having a US passport), you are still bound by rules if you happen to be a citizen anyways (eg you have to file/pay US taxes). So a lot of kids find out later in life that they are actually natural born US citizens and have been evading US taxes illegally.
But then you need to close the loopholes around people who clearly haven't renounced citizenship and don't want to but still find themselves pregnant in foreign countries such that they don't need to make emergency trips back to the homeland. And that gets a little complicated because you need to distinguish them from actual expatriots in a fair way.