Is this allowed?

[goigle!]

This rule gets broken if you arrest people outside of their homes.
11.1 As President, you must follow the server rules. You cannot make any laws that conflict with them, example no 'Kill on sight, drive on left side of road, arrest on sight' laws.

Im not sure if implementing the "Police only need the reason "martial law" to instigate a search warrant" would be looping holing this rule:
14.4 You must have a valid reason to raid players, i.e. contraband, burglary, and needing to take hostages are all valid reasons.
1.11 Purposefully attempting to find loopholes in the rules will likely result in punishment.

His laws aren't arrest on sight, you are not supposed to be outside during a lockdown anyway. 14.4 is for criminal raids, look at the search warrant rules:

10.1 Do not randomly search a property; you must have probable cause. Some examples include:
10.1a Gunfire heard coming from within the property;
10.1b Criminal activity visible on the property;
10.1c A suspect on the property;
10.1d Contraband heard or visible on the property.
10.2 You must have a search warrant from the President to search the property, unless the lives of officers or hostages are at immediate risk.

So searching all of the city might not be allowed but an area would probably be ok