Operation Steinbock OOB. as of 20 January 1944.
Hmmm. Rather optimistc to think that 167 German medium/heavy bombers are going to burn London to the ground.
The 270 odd Ju-88s may also have been used for level bombing, same with the Ju-188s. After all, the Ju-88s had spent a lot of time level bombing above London about three years earlier.
Afterall, the book you linked clearly states that 440 bombers in two waves of 220 dropped 475 tons on the first night of the operation. A little difficult if there were only 167 bombers available...
The Ju-88 was at least as capable as the Do-217K/M for night bombing.
This is, as usual, besides the point.
The question was, did the Germans believe in the concept of the self defending bomber?
To my mind, the answer is no.
As a continental power, Germany was vastly more concerned with the use of the bomber as a tactical weaponto support its ground operations. The usurpation of heavy bomber plans in favour of larger numbers of smaller, lighter bombers that could perform dive bombing points to this. The countries that believed in the self defending bomber (US, UK, Italy) were generally maritime powers, where bombers would be forced to operate at long range out of necessity.
German bombers were (quite reasonably and, as the war showed, generally in practice as well) expected to operate under the protection of the fighter units. This was generally accomplished across the Polish, Norwegian, French, Russian, Italian and Mediterranean campaigns.
German bombers didn't need to be self protecting, as the fighter units were supposed to eliminate/drive-off fighter opposition that they might encounter.
When this wasn't achieved, such as some of the long range forays into northern UK during 1940 or long range ops in support of the war in the desert in 1943, German bombers suffered accordingly. As a result, under these circumstances they took the British avenue, and switched to night bombing.
Another indication would be the lack of powered turrets in bombers, as well as their generally light defensive armament. The US/UK, which both believed in the 'self-defending bomber' expected that the powered defensive turrets they had developed would be sufficient to provide enough weight of fire to drive off enemy fighter attacks.
Initial combat results showed the opposite. This forced the US/UK to switch tactics. The RAF switched to night bombing (as it lacked any real escort fighter, and showed little interest in the concept through the war) after the shock of having its Wellingtons not come back in 1939/1940 . Even when the Lancaster debuted, with even heavier defensive armament, their early losses in daylight bombing operations were enough to ensure that the RAF never really canvassed daylight bombing again until 1944.
The US was forced to adopted a policy of heavy fighter escort for its even better defended bombers. Fortunately the right tool for the job, the P-51, appeared at the right time.