What state? In Luther's Germany there was no Germany but a collection of 300 or 400 principalities. It would be left to Bismarck 400 years later to sow them all together. So it was not increasing the power of the German state. But there were, of course, other states in Europe which were reinforced by the church and its was the breaking of the connection 'tween church and state to which Luther pointed the way. That is one of the reasons why the French revolution was so violently anti-clerical, because the church had cut its deals with the state to the detriment of outsiders.
Anyway, what is this "exclusive intercession" of which you speak? Never existed that I know of.
Really? There was a free market in the sale of indulgences? There were sources from which indulgences could be had cheaper than from this exclusive source? Who knew? Must have been a black market my histories never mentioned.
And all those princes wanted to be free of the restrictions the Church set on their power and Luther gave them the opening.