Natural born citizens is generally interpreted to mean born with the right to American citizenship. If you're born to American parents while traveling or living overseas it is generally held that you still qualify. See Ted Cruz's Canadian birth but with American citizenship for example.wasn't it the american panama canal zone?
The actual reason McCain could have been controversial is that he was not actually *born* with the right to American citizenship. That was conferred a few years later when Congress changed the laws on citizenship for people born to Americans in the canal zone. But in the end his entitlement to citizenship is by birth so it likely wouldn't have been an issue.