See the link here:
https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title8-section1401&num=0&edition=prelim
"The following shall be nationals and citizens of the United States at birth:
...
a person born outside the geographical limits of the United States and its outlying possessions of parents one of whom is an alien, and the other a citizen of the United States who, prior to the birth of such person, was physically present in the United States or its outlying possessions for a period or periods totaling not less than five years, at least two of which were after attaining the age of fourteen years: [... more stuff that broadens application to certain individuals serving abroad]"
So as I stated - anyone born to a US citizen-parent who has spent five years+ in the US as an adult (actually only two over age of fourteen is needed) is a citizen at birth, and 'naturalization' provisions cited do not apply. (I don't know what the provision you linked to are for, not the issue at hand).
This is fair, applies to all citizens (naturalized, by descent, or born in USA) equally, etc. It is not a very high bar (I believe by default would apply to all naturalized, with some very specific exceptions, because that's how long it takes to get citizenship), and hence actually not 'harsh' in most respects.
It
would, however, limit somewhat extension of citizenship (by descent) FROM Canadian-born citizens. Not much, granted, but some - and actually be a response (of sorts) to so-called 'birth tourism' - in that anyone who is born in Canada and does not reside in Canada for long would not be able to pass on.
Hardly unfair by the standards proposed here (as far as i can understand them, which seem to always come back to the one single case of Lebanon, with not much else).
So yeah - we can easily eliminate having second class citizenship be a thing, while still protecting from whatever 'citizenship explosion' seems to be imagined as the great liability hanging over Canada from citizenship by descent - and evne address one outstanding (imagined anyway) issue, birth citizenship.