Many people and many pastors and Christians are using this term these days to attempt to describe God’s love for us. It seems God’s love must operate within a moral framework. God cannot love evil. So then how could His love ever be unconditional? What would compel us to repent if His love for us was unconditional? His love is the greatest of all things, it is unfailing, but unconditional?
You raise some good points concerning a perhaps too casual use of the term “unconditional.” Typically a term like this is well-defined initially within a specific context, but then is repeated without the same attention to detail. I think that we could say that God’s love is unconditional in the sense that it can never be discouraged and that many of its benefits are experienced by “the just and the unjust.” But that is very different from the idea that God offers personal relationship unconditionally; that must take into account who God is and who we are. Acceptance of the Gospel is the condition for experiencing the love of God as His own child! To think otherwise is to slip into the error of universalism which violates the nature of relationship, trivializes the life and death of Jesus, and rejects the Biblical teaching on the reality of Hell, in favor of a “they all lived happily ever after” fairy tale.
We probably have to interact with people to find out what they mean when terms like this are not clarified. I wish I could tell you that the explanation will usually be helpful, but that is probably optimistic; on the other hand, it may open the door to God’s light and truth if we can see the person, as well as the issue.