I think that interpretation is very weak, but as far as I can tell, it's not the basis for any of their programs, just an explanation offered to support their minimization procedures, which are probably inadequate. Legally, that seems to be the issue: they have procedures in place to try and only collect foreign data, but American data gets caught up in the net too and their procedures for filtering out American data aren't good enough. That's bad, but I don't think it evinces an intent to actively ignore the law.

What's the legality of spying on our allies? Aren't treaties supposed to be law once ratified?

What's the legality of basically giving full system access to all NSA data to 'allies' such as Israel with only a footnote in the agreement about using the 'honour system' if they find data in the system that shouldn't be there (e.g. a Senator's data gets caught in the net)?

What about the legality of skirting 'no spying on Americans' laws by forming agreements with foreign bodies such that said foreign body readily shares all data it has from spying on Americans (and the NSA does the same thing in kind, sharing data that said foreign body isn't legally allowed to collect on its own).