Grace & Peace!
Ralphinal, I think this a very well-balanced and thoughtful explanation of the indulgences problem. I did, however, want to address the last point that you made in your post, because this is where (as I understand it) politics enters in quite forcefully.
You are absolutely correct that the selling of indulgences was never taught by the church. Many have argued, on the basis of this, that Luther should have recanted his teaching on indulgences when given the opportunity. Technically, it would have been right for him to recant. However, given that his own ordinary was unwilling to curb indulgence abuses when Luther wrote to him, the message Luther must have received was: this abuse is permitted. To recant would have been akin to saying: I was wrong about the abuses, all’s well–and would have vindicated the erroneous position of his ordinary (and those like him) who permitted abuses to persist.
Given Luther’s scrupulosity, as well as his sense of having been betrayed by his ordinary and by the Pope, the selling of indulgences became the best example of how the Church as an institution failed the gospel, because no one seemed particularly interested in curbing the abuses–except Luther. Granted, Tetzel was disciplined, but were it not for Luther’s steadfast witness on the issue, it is doubtful that Tetzel’s reprimand would have occurred.
From the on-the-ground RC perspective these days, it seems like Luther should have just trusted that something would be done about the problem and kept his mouth shut (or should have been more like St. Francis, as if the political conditions of Francis’ day were identical to those in Luther’s, or would have permitted such behavior without marginalization, obscurity, or martyrdom–Jan Huss was not long dead by Luther’s day)–but there were no indications that anything was going to be done at all, and in the meantime, many people were deceived into believing something heterodox regarding indulgences: while the teaching of the Church may have been one thing, the practice (at least in Luther’s neighborhood) was quite another–and there was a whole institution, or so it seemed to Luther, committed to promulgating the faulty practice. For this reason, I believe Luther’s protest was an act of Holy Spirit inspired witness.
Those were dark times for the Church and for the papacy. Frankly, I think it is due to the grace of the Holy Spirit (and Christ’s promise) that the Church, catholic or reformed, got out of it alive!
My 2p.
Under the Mercy,
Mark
All is grace and mercy–Deo gratias!