I cannot defend Luther's action in this, but it isn't quite as simple as your description.
From Here I Stand: A Life Of Martin Luther, quoted here:
http://www.ntrmin.org/Armstrong%20and%20Bainton%201.htm#a6
"“There are several incidents over which one would rather draw the veil, but precisely because they are so often exploited to his discredit they are not to be left unrecorded.” The most notorious was his attitude toward the bigamy of the landgrave, Philip of Hesse. This prince had been given in marriage with no regard to his own affections — that is, for purely political reasons — at the age of nineteen to the daughter of Duke George. Philip, unable to combine romance with marriage, found his satisfaction promiscuously on the outside. After his conversion his conscience so troubled him that he dared not present himself at the Lord s Table. He believed that if he could have one partner to whom he was genuinely attached he would be able to keep himself within the bounds of matrimony. There were several ways in which his difficulty could have been solved. If he had remained a Catholic, he might have been able to secure an annulment on the grounds of some defect in the marriage; but since he had become a Lutheran, he could expect no consideration from the pope. Nor would Luther permit recourse to the Catholic device. A second solution would have been divorce and re-marriage. A great many Protestant bodies in the present day would countenance this method, particularly since Philip had been subjected in his youth to a loveless match. But Luther at this point interpreted the Gospels rigidly and held to the word of Christ as reported by Matthew that divorce is permissible only for adultery. But Luther did feel that there should be some remedy, and he discovered it by a reversion to the mores of the Old Testament patriarchs, who had practiced bigamy and even polygamy without any manifestation of divine displeasure. Philip was given the assurance that he might in good conscience take a second wife. Since, however, to do so would be against the law of the land, he should keep the union a secret. This the new bride's mother declined to do; and then Luther counseled a lie on the ground that his advice had been given as in the confessional, and to guard the secrete of the confessional a lie is justified. But the secret was out, and the disavowal was ineffective. Luther's final comment was that if anyone thereafter should practice bigamy, let the Devil give him a bath in the abyss of hell.
The whole episode had disastrous political consequences for the Protestant movement because Philip, in order to secure pardon from the emperor, had to dissociate himself from a military alliance with the Protestants. The scene of Philip abjectly seeking grace from His Imperial Majesty has a certain irony because Charles deposited illegitimate children all over Europe, whom the pope legitimatized in order that they might occupy high offices of state. Luther's solution of the problem can be called only a pitiable subterfuge. He should first have directed his attack against the evil system of degrading marriage to the level of a political convenience, and he might well have adopted the later Protestant solution of divorce."
Wow, that’s an impressive bit of spin, you dug up. No facts, all spin.
>> If he had remained a Catholic, he might have been able to secure an annulment on the grounds of some defect in the marriage; but since he had become a Lutheran, he could expect no consideration from the pope. Nor would Luther permit recourse to the Catholic device. <<
The irony is at this very moment, the Pope was recognizing Henry VIII as Defender of the Faith. Boy, I bet HE’d get granted an annulment for the asking, huh?
>> But Luther AT THIS POINT (emphasis mine) interpreted the Gospels rigidly and held to the word of Christ as reported by Matthew that divorce is permissible only for adultery. <<
IOW, the author acknowledges that this is inconsistent with Luther’s statements.
>> Luther’s final comment was that if anyone thereafter should practice bigamy, let the Devil give him a bath in the abyss of hell. <<
CYA