My issue is that he did not actually defend the inside at all, he was simply on that line through the previous curve.
That´s clueless. He did stay glued to the right until Vettel moved to the outside. That´s a defense. Just like when people stay glued right in the way to the Hockenheim hairpin.
Your rule would effectively mean no-one could ever defend the outside on a short straight into a turn following a curve in the same direction..
What are you talking about? My rule? No, it´s how it works, I didn´t make it like this!! People staying right for the entry to the Hockenheim hairpin are considered to have defended, despite they haven´t steered anywhere during the previous "straight". The same for Australia turn 3 and many other corners. After staying glued to the edge forcing your rival to the outside, you can´t slot in their face again, especially not before a braking zone.
It´s not that hard, mate. In a straight after a left hander and before a right hander, you have two options: doing the normal triangle line -not defending the inside for next corner- and staying glued to the right edge until the other guy moves to your left -that´s defending-. After you have forced your rival to the outside line, you CAN´T come fully back to the left edge. So yes, you CAN defend in that scenario, just as Schumacher did: staying all the way down the inside. That´s defending after all.
It looked 'worse' to a less-then-observant viewer because Vettel didnt go up the inside as he was free to do, because he didnt WANT to overtake.
Again, where each one braked was totally irrelevant to the topic, that you can´t still spot: the move back to the racing line. Some smoke a second after the move discussed won´t distract anyone and is irrelevant

Vettel trying a pass or not is irrelevant to Schumacher´s move back to the racing line. Oh, and by the way, Vettel would have outbraked Michael if he could. He just couldn´t. They were trying to get rid of him, passing him on the track is just that
PS: The guy asking for bans... are you serious, man?