My concern really was with whether taking pictures like this is right as a moral/ethical matter -- I agree that it is clearly legally not a problem.
Actually, I was trying to make the point that the legal rule in North America* encapsulates an ethical consensus regarding what is appropriate, which may usefully serve an appropriate source of guidance for your personal decision. Of course, you may always impose a more restrictive regime on yourself to suit your comfort level.
I think where I come out is that it is OK to photograph people in public places as long as they aren't aware that you are doing it or they clearly wouldn't mind if they were aware, on the theory of no harm, no foul.
The first half of your formula sounds more useful to me than the second—if only because people who "wouldn't mind if they were aware" that you were photographing them probably would behave differently if they
were aware. The essence of "street photography" is capturing people interacting with each other or their environment during a fleeting and unguarded moment. I've lost count of the number of my attempts at street photography that have been ruined because the subject(s) noticed I was pointing a lens in their direction and decided to help me out by striking an "appropriate" pose.
One of my favorite examples of the genre is Garry Winogrand's 1964
World's Fair, New York City, New York, perhaps because I spent a lot of time shooting pictures there as a teenager (albeit not anywhere as successfully as Winogrand):
If the subjects had been aware they were being photographed, they might well not have minded. But instead of a classic of street photography, Winogrand probably would have wound up with tourist's snapshot of a bunch of other tourists smirking into the camera.
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*My understanding is that the Canadian and Mexican law regarding photography in public places is essentially the same as that in the United States.