5. The pope does not intend to remit, and cannot remit any penalties other than those which he has imposed either by his own authority or by that of the Canons.
I think it's difficult for us to put our minds back into the way folks thought in 1517. (Actually, it's hard to do that for almost any time beyond a few years back). What Luther is bringing up for discussion here is the question of the Pope's remission of penalties for sins, in time and eternity.
Notice that he's not making a charge against the Pope: he says "the pope does not intend to remit." Luther is arguing against claims made in the Pope's name for the remission of sins by the hawkers of indulgences.