Well, the quote is almost certainly apocryphal. But the legend caught on because the anti-Cathar crusade was so brutal.
The basic problem was that the Cathars were a death cult, holding that the greatest sanctifying act was to starve yourself to death. But death cults usually die out pretty quickly, right? Well, in the case of the Cathars they taught that supporting the “perfectoi” was also a means of “lesser” salvation. Thus, the German mercenaries were shocked at the fact that the apparently Catholic broader population supported the perfectoi militarily.
Thus, real or not, the quote reflected the fact that Crusade had turned from being a liberation of people from a death cult into a foreign invasion of one Catholic people by another.
Yes. They thought the material world was evil.