That isn't what any of that says at all, Art. Pretty much everything you said about everything there is wrong. From the initial link (if you could provide the quote you are referring to...) to your interpretation of the convention. It just plain doesn't say what you are interpeting from it. The limits on "innocent passage" - Aricle 19 is a laundry list that makes your whole line of argument irrelevant (for the purpose of this thread, the relevant one is item "G").
Assuming the British were, in fact, in Iraqi waters, their actions were perfectly in accordance with international law, as is practiced everywhere around the world, hundreds of times a day. If they were in Iranian coastal waters, they were wrong, but they would not be subject to capture unless the Iranians are asserting an act/state of war. Either way, for the Iranians to sieze them is an out-right act of war.