Actually, it's perfectly reasonable to accept the definition of the Gods being immortal as having no natural end to their lifespan and also being extremely difficult to kill, but still killable. It's been used that way to describe Vampires and such as well, so it is a historically accurate use.
However, if you're going to accept this definition, then Kratos killing them isn't really any bigger of a deal than Link taking out Ganondorf.
If you're going to use the definition of God = immortal = cannot be killed EVER, then Kratos couldn't have killed them, period, so using the excuse of "Kratos is all powerful because he can kill gods" just doesn't fly.
Really, the problem isn't from the confusion of the term, but from LOL MATURE trying to use 1 definition to allow Kratos to kill them, but then use the other definition to state that Kratos now can't be killed.