I agree with you that Luther did not provide the best translation of Romans 3:24, using a functional equivalence of the verse saying grace alone. I personally tend to be more comfortable with translations that are further along on the functional equivalence side of translation philosophy. That being said, Luther’s translation is not off-base, particularly considering just a few verses prior to this phrase Paul states that the righteousness of God has been manifest apart from the law … through faith in Jesus Christ for all who believe. This passage is drawing a clear distinction between justification by works, which Paul has already spent two and a half chapters discussing that no one is justified by works, and righteousness obtained by faith apart from the law. In that sense, Luther’s translation is acceptable, although from an academic standpoint is not the best translation and does nothing to strengthen the argument that Paul has already laid out that we are justified by faith.
That being said, I find it hilarious when a Roman Catholic who would uphold mistranslations in the Vulgate as legit (i.e., Do Pennance instead of Repent, ascribing the one who will crush satan’s head as the mother of the seed to come, etc.), would then dare to try to nail Luther to the wall for that one.