Obama's summary execution of Americans, conducted as a military operation through the CIA, would indeed seem to break with precedent and qualify as one of those watershed moments in America's long retreat from the rule of law. While liberals criticized the Bush administration for warrant-less wiretapping and detentions without trial, one would think that the outright killing of an American citizen without due process would qualify as a greater offense.
The legal gymnastics used to defend this and previous executive power grabs usually cite the supposed failure of the Constitution to "grant" rights to whichever particular class of people in question -- in this case, enemy combatants or "traitors," since al-Awlaki and Khan cannot be said to lack protection on grounds of citizenship. All such arguments turn the Constitution on its head. Not only does the Constitution specifically authorize the federal government to deal with treason (unlike most of the other crimes it currently prosecutes), thus implying that the Constitution does have something to say about "traitors" -- namely, that they be afforded all the due process rights of any other criminal suspects under the Constitution -- but its silence on enemy combatants should mean that this particular label is constitutionally void of any separate meaning or need for special treatment.
Most importantly, the Constitution does not "grant" rights to anyone -- rather, it gives powers to the U.S. government and defines and limits those powers with respect to the rights of people. People have rights regardless of the Constitution; the government, on the other hand, is a legal fiction brought into existence with its powers circumscribed by the Constitution. Moreover, the Bill of Rights does not distinguish between normal criminals and traitors, nor even citizens and non-citizens -- instead, it requires that "no person... be deprived of life, liberty, or property, without due process of law."
That's if we want to look at the matter as a cold constitutional question. As for practicality and ethics, the presidential supremacists defending detention without habeas corpus and "enhanced interrogation" techniques during the Bush years made an argument that was more difficult to refute than Bush's critics would like to admit. The argument essentially went like this: "If the president can kill people in war, what is so bad about detention, torture, and wiretapping? In war, people die, and so any lesser violation of a person's rights would seem less extreme in comparison."
Indeed, modern war itself is a crime greater than any one of its constituent parts. Lawless detentions, assassinations, surveillance, mistreatment of prisoners, and killing the innocent are all elements of this larger evil. In August, reports revealed that an estimated 168 children had been killed in the U.S. drone attacks in Pakistan, started under Bush and ramped up dramatically under Obama. Certainly, there are no wars without atrocities, and in some ways the least controversial part -- the mass killing -- is the worst. The many thousands snuffed out are often dismissed as "collateral damage." Perhaps this is why al-Awlaki is getting so much more attention than Khan, to say nothing of the thousands of other victims killed by previous drone attacks who were never individually "targeted."
Yet the deliberate murder of al-Awlaki should frighten us. It reveals the limitless nature of the modern presidency's power, not because killing an American citizen is morally worse than killing a non-citizen, or bombing a country in an "undeclared" war is less ethical than in a "legal" one, but because it demonstrates that even by the supposed rules governing presidential power, the presidency is even less restrained than before.
In terms of sheer power, the presidency rivals any in world history. It has controlled the nuclear button, run the CIA, and maintained primary influence over all other nations. It has set economic policy, conspired to centrally plan world monetary affairs, and waged massive wars costing millions of lives all around the world. Now it has its own hit list, sending robots to distant lands to snuff out the targeted. Perhaps the most significant point, however, is the public's reaction.