The secret of international law is that it doesn't really exist. Or that the "law' in "international law" does not mean the same meaning as the "domestic law" within a country's borders. All you have are agreements between countries but with no true external body that can enforce penalties or punishments without the threat of war. So what happens is that the most powerful win arguments.
So as you say, "law" doesn't really apply, it's more of a moral decision as to whether a country should spy on another country. We can clearly see the outcome of that decision here.
I don't think a country is the bad guy when they are simply trying to stop another country from spying on them.
http://en.wikipedia.org/wiki/Human_rights_in_the_Islamic_Rep... vs http://en.wikipedia.org/wiki/Human_rights_in_the_United_Stat...
That's true. And also, the "law" in "domestic law" doesn't apply equally as people assume it does. Really, it's a huge fairy tale that "everyone is equivalent in the face of the [domestic] law", which for some reason many grown ups believe.
It's really a sad choice of words that the word "law" is used for both physical phenomena, where it i absolutely applied, and legal situations, where it applies mostly when it isn't inconvenient to the rulers (which is a word that better described what's usually called "leaders")