You are right — bombing of cities was contemplated as a war crime change but not included since the Allies had engaged in the practice (and at considerably more volume and casualties than the Axis powers).

The fact that the Allies engaged in such "terror bombings," and even the atomic bombings, was brought up at Nuremberg by the defense in an attempt to draw attention to the hypocrisy of charging anyone for "war crimes" at a time when both sides practiced indiscriminate massacres. But it was not hypocrisy in the sense of the Axis being actually charged for something the Allies also did; it is a broader sense of hypocrisy that was alleged.