You're spot on, Hellshade. Most everybody agrees that Fighter Command was on the ropes just before that 'unfortunate incident' of bombing London. Winston Churchill described that night as the one that lifted his spirits most during the Battle of Britain. As he and his staff stood on the rooftops watching London burn, he said he knew that this would bring America in. England's fortunes had just taken a turn for the better.
Britain's tit-for-tat bombing of Berlin was the perfect stroke to drive Hitler into a rage. Fighter Command was off the hook.
The problem with the Luftwaffe was that it was always seen as an adjunct to the Wehrmacht. It's fighters would attack enemy airbases and establish air superiority. The ground troops would advance. When they hit a hotly defended point, they'd pause and call in the Stukas to destroy the enemy position and the Wehrmact would pour through the hole. Bombers were for knocking out airfields, rail hubs, truck convoys, etc. It was strictly tactical, support-the-ground-troops thinking. There was no long range strategic thinking. The same held true for the Navy. The Nazis hadn't a clue about naval warfare.