But targeting the center of the city and ignoring the rail yards and factories on the outskirts? That's terrorism.
It could conceivably have been a war crime, if the middle of the city contained no military assets: there's no requirement to go for the "best" or biggest target. Also bear in mind the original accounts were deliberately inflated for propaganda reasons, increasing the claimed death toll by almost an entire order of magnitude compared to subsequent German figures. It wasn't like modern guided missiles, which you can fly between buildings to reach a target - targeting was more "should we hit this city, or that one?" In Dresden's case, the target area was several miles wide!

Moreover, it seems the Germans were holding POWs in those rail yards, which may have made bombing them rather less appealing to the Allies.

Not always. I don't believe the Japanese, for example, signed the Geneva Convention. Nor did the USSR.
The four Geneva Conventions we know as 'the Geneva Convention' today was agreed in 1949, then ratified by Japan, the US, UK and USSR in 1953, 1955, 1957 and 1960 respectively. The laws of war in force during WWII were, as I think I mentioned earlier in this thread, older - including the First Geneva Convention of 1864, ratified by all those countries (except of course Russia wasn't the USSR in those days) back in the 19th century.

What difference whether the bomber was wearing a uniform or a business suit?
For one thing, it's the difference between war and war crime: wearing a uniform is a requirement of the laws of war. Remember all those movie scenes with captives being "shot as spies" if they're out of uniform?