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Children born abroad to one US citizen parent are US citizens, as long as their parent has lived in the US for a certain length of time. See http://en.wikipedia.org/wiki/United_States_citizenship#Through_birth_abroad_to_one_United_States_citizen
I don't think this bill is worded well. What about kids born to two US citizens while their families are on a day trip to Toronto? Under the original "natural born citizens" language, there's a plausible argument that they could become president. If this bill is passed, it would be reasonable to say that they CAN'T, because they weren't mentioned while military kids were.
Why not just say that a natural born citizen is any person who acquires US citizenship at birth, rather than by naturalization? I've always thought that was the most reasonable interpretation of the "natural born citizen" phrasing anyway.