The choice of targeting strategy and targets was largely chosen by a Target Committee of military and scientific experts. For a variety of reasons, they thought cities would produce the most "psychological effect" on the Japanese high command and population, thus leading to surrender. In the second meeting of the Target Committee (May 1945), they specifically ruled out "tactical" use:

It was agreed that for the initial use of the weapon any small and strictly military objective should be located in a much larger area subject to blast damage in order to avoid undue risks of the weapon being lost due to bad placing of the bomb.

"Small" in this sense means "smaller than a city." And again, on the goals of it:

It was agreed that psychological factors in the target selection were of great importance. Two aspects of this are (1) obtaining the greatest psychological effect against Japan and (2) making the initial use sufficiently spectacular for the importance of the weapon to be internationally recognized when publicity on it is released.

They wanted the first use to be something spectacular and terrible. It was intentional. Their truly most-desired target was Kyoto, an ancient city of 1 million people, and would have been even "worse" than Hiroshima. This was vetoed by the Secretary of War with Truman's concurrence.

Could they have used the second bomb (after "initial" use) differently? It wasn't reconsidered — the strike order essentially said, keeping bombing the targets until you run out of bombs or are told otherwise. The second use of the bomb was in many ways a bungled and poorly-planned operation; it was not the result of high strategy. After that, Truman halted all further atomic bombing.

Would they have used nuclear weapons tactically after these two uses, if the war had gone on? Perhaps — it was on the table, it was being discussed:

H: That is the information I wanted. The problem now is whether or not, assuming the Japanese do not capitulate, continue on dropping them every time one is made and shipped out there or whether to hold them up as far as the dropping is concerned and then pour them all on in a reasonably short time. Not all in one day, but over a short period. And that also takes into consideration the target that we are after. In other words should we not concentrate on targets that will be of the greatest assistance to an invasion rather than industry, morale, psychology, etc.

S: Nearer the tactical use rather than other use. [...]]

H: Not the same day or anything like that. We might do it a couple or three days before. You plan to land on a certain beach. Behind which you know there is a good road communication and maybe a division or two of Japanese troops. Neutralization of that at some time from H Hour of the landing back earlier, maybe a day or two or three. I don’t anticipate that you would be dropping it as we do other type bombs that are in support of the infantry. I am thinking about neutralizing a division or a communication center or something so that it would facilitate the movement ashore of troops.

They had a production system that could produce over 3 bombs a month if it worked as planned, and they contemplated using it in tactical ways to help an invasion of Kyushu. But the planning never got very concrete because the war ended before then.

Actually, Kokura, a castle town located near the top of Kyushu island, was meant to be the initial target for the 'Fat Man' bomb that ended up getting dropped over Nagasaki (a city also located in Kyushu, albeit further southwest). Considering the US had two prime cities that they targeted on Kyushu, they were most likely aware of Kyushu's military presence.

Sources: http://blog.nuclearsecrecy.com/2014/08/22/luck-kokura/

http://www.nytimes.com/1995/08/07/world/kokura-japan-bypassed-by-a-bomb.html

Apocalypse Never: Forging the Path to a Nuclear Weapon-Free World, by Ted Daley

Kyushu was not an important target in terms of what the Truman and the US wanted to accomplish. You can see an image of the potential bombing targets here though the link caters mostly to Yokohama. The reasons for picking these targets is listed:

According to declassified documents, the targets should be no less than 3 miles (about 4.8 kilometers) in diameter, be located between Tokyo and Nagasaki and have a high strategic value. The members also agreed that cities already extensively damaged by U.S. air raids would not be desirable targets. The U.S. military wanted the atomic bomb--a new weapon that would be used for the first time--dropped on a dense urban center to determine the destructive power of the bomb.

In short, the reasons for choosing the targets do not exclude Kyushu as a potential target, at least at first. One reason is that Kyushu served as a potential landing site for US invasions (source). Operation Downfall was a planned invasion of Japan that listed Kyushu as said landing site. Hiroshima was chosen due to the city's size and shape being perfect for the a-bomb, in addition to holding military facilities and troops (source). The other options were Nagasaki and Kokura, with the former being bombed. Really, the important thing to note is that the city needed to not be bombed. Kyushu was damaged in the Tokyo Firebombing Raids (source) and therefore disqualified from selection.

To answer your 3 questions:

a) The US would've been able to demonstrate nuclear superiority regardless of the town bombed.

b) The "shock" factor most likely wouldn't be diminished considering the use of a-bombs were widely regarded as a mistake. Eisenhower, who followed Truman, says "During his recitation of the relevant facts, I had been conscious of a feeling of depression and so I voiced to him my grave misgivings, first on the basis of my belief that Japan was already defeated and that dropping the bomb was completely unnecessary, and secondly because I thought that our country should avoid shocking world opinion by the use of a weapon whose employment was, I thought, no longer mandatory as a measure to save American lives."

c) Civilian casualties were not a concern of the US, see the Firebombing raids. Criticisms would've likely occurred anyhow with regards to Kyushu. Also, war crime punishment would've likely been the same considering the destruction caused by a-bombs.

As far as being mislead, I'd argue they were fair assumptions as I had to do a little digging to find information regarding Kyushu. The Firebombing should act as a testament to the failures of Japanese air defense being incapable. As far as military targets being too spread out, the US did define a range when looking at potential bombings.