What made Luther a heretic and not a schismatic? I know the difference between heresy and schism, but I don't know why various Protestant reformation leaders, Martin Luther in particular, wouldn't have been satisfied by merely being a schismatic group.  Were there any reformers who rebelled against papal and church authority, but didn't attempt to change any of the other doctrines of the Catholic Church?  

What happened that caused Luther to go from the 95 thesis, which pales in comparison to anything a modern day Lefebrite might say about the Catholic Church, to outright rejection of the core tenants of the Catholic Faith?  Did he even reject them initially or did the Catholic Church leaders somehow coax him into heresy?
Luther and the Church

It must be said that Martin Luther was originally a servant of the Church, and prior to posting his 95 theses, he expressed loyalty (at least superficially) to the Pope.  Despite his frequent battles with spiritual depression, Luther proved himself to be a very intelligent man, was ordained a priest, and became a doctor of theology. 

Initially, he was so maniacally in favor of the papacy that he professed his desire to be “the most brutal murderer” on the pope’s behalf and “to kill all who even by syllable refused submission to the pope.”(1) Of course, this was also while he was also disregarding the guidance of his confessor, the rules of his monastery, and traditional Catholic teaching in his excessive forms of self-prescribed penance and refusal to believe that he had been absolved of sin. 

Stemming from an abusive childhood relationship with his German occultist Father(2), Luther suffered from frequent God-fearing, self-judgmental panic attacks. He could not look upon a crucifix. He tried to avoid performing Mass or being in the presence of the Blessed Sacrament. His life was one continual terror of damnation. 

Then came his “thunderbolt” revelation, and he felt he had broken free of his own sinfulness, not by the sacraments of the Church, but by faith alone. As Luther says, rather arrestingly:


  “Be a sinner and sin on bravely, but have stronger faith and rejoice
  in Christ, who is the victor of sin, death, and the world. Do not for
  a moment imagine that this life is the abiding place of justice: sin
  must be committed. To you it ought to be sufficient that you
  acknowledge the Lamb that takes away the sins of the world, the sin
  cannot tear you away from him, even though you commit adultery a
  hundred times a day and commit as many murders.”(3)


When Luther posted his 95 theses on the church door in Wittenberg in 1517, his immediate cause of protest was the sale of indulgences by a Dominican friar named John Tetzel whose mission was to raise money, in part, for the rebuilding of St. Peter’s Basilica. Tetzel was renowned for packing in the peasant faithful with his preaching. His commercial pitch, however, went far beyond the bounds of propriety and canon law, if not common practice. Ironically, it echoed, in a way, Luther’s own doctrines of salvation by faith alone - Tetzel merely gave that saving faith a monetary value and material form. Anything could be forgiven, said Tetzel, if a punter paid his money and bought a papal indulgence. Luther struck at this inviting and disreputable target. While it was not an unusual occurrence for churchmen and academicians to publicly post theses and then debate them, this time a rhetorical firestorm erupted.

Historian H.W. Crocker III sums up Luther’s separation from Rome(4):


  Luther had not, at this point, entirely broken with Rome. While he
  dismissed Julian II and Alexander VI as inferior popes, he wrote to
  Pope Leo X in loyalty and submission to Church discipline. In this,
  however, Luther was less than honest. He swore he would accept his own
  death if the pope ordered it. But when Leo beckoned him to Rome,
  Luther shied away. Nor did Luther confide in the pope that in his
  private correspondence he was already linking the office of the papacy
  with the Antichrist. 
  
  ...[L]eo took the initiative in reforming the Church precisely on
  the point Luther had attacked. In 1518, the pope clarified Catholic
  practice on indulgences, reminding the faithful that they could not
  buy their way to Heaven; indulgences were merely forms of penance,
  alms offered for forgiveness of temporal punishment, and certainly not
  a blank check for sins to be committed or to buy the freedom of a soul
  in Purgatory. A papal emissary ensured that Tetzel was disciplined,
  and Luther again affirmed his submission to the pope, while concealing
  his continuing doubts about “whether the pope is the Antichrist or his
  apostle.(1) 
  
  The full break came when, in a debate, Luther denied the
  primacy of the pope, held the Council of Constance in error, and even
  praised some of the doctrines of Jan Hus. He had now moved from being
  one of the many vocal Church reformers - though easily the most
  politically powerful because of anti-papal sentiment among the people
  and princes in Germany - to being a Hussite heretic. 
  
  By 1520, Luther was penning such reformist tracts as his “Epitome,”
  which openly declares “that the true Antichrist is sitting in the
  temple of God and is reigning in Rome - that empurpled Babylon - and
  that the Roman curia is the Synagogue of Satan….[T]here will be no
  remedy left except that the emperors, kings, and princes, girt about
  with force of arms, should attack these pest in the world, and settle
  the matter no longer by words but by the sword….[W]hy do we not attack
  in arms the Roman Sodom which has without end corrupted the Church of
  God, and wash our hands in their blood?”(2) (emphasis added)  
  
  
  Quoted in Durant, p. 349 
  Ibid.
  


In Luther’s mind, the religious hierarchy of the Church deserved no special esteem and no independence under its own canon law from the state. Canon law, in Luther’s view, was merely the law laid down by the Antichrist in Rome. The real church, according to Luther, was an invisible institution, held only in the faith of men. The state - the German princes, the German “Reich” - was the only true, temporal reality, and it was to it, not to the Church in Rome, that men and law should be subordinate. 

In Luther’s words:


  No one need think that the world can rule without blood. The civil
  sword shall and must be red and bloody.(5)


Luther’s political platform was earthly, populist, and nationalist - completely at odds with the ideals of Christendom, which were historical, hierarchal, and Catholic, with all nations unified under Christ’s Church, resting on the bones of St. Peter in Rome, with the pope, the Vicar of Christ, a monarch set over kings by Christ. The German people and their rulers were more than ready, by this time, to throw off the power of the Italian Pontifex Maximus.  This secular seizure of localized power not only enthroned Lutheranism as the state religion, but also nailed the lid on the coffin concerning the communion of Luther's Germany with St. Peter's Rome.

Interestingly, Germany can claim credit for being the birthplace of Protestantism, as well as Nationalism, both of which have survived to this day. German nationalism, as we know, came into its own fullness at the turn of the 20th century, but was drastically deflated by the end of the second World War. 

By 1525, Germany had been launched into a state of revolutionary turmoil. In less than 10 years Luther’s spiritual disposition had radically evolved from a masochistic Augustinian monk into a Germanic-tribe religious Chieftain.  It goes without saying that Western Christianity has never been the same.

The Catholic Encyclopedia summarizes Luther’s theological wake:


  Luther the reformer had become Luther the revolutionary; the religious
  agitation had become a political rebellion. Luther's theological
  attitude at this time, as far as a formulated cohesion can be deduced,
  was as follows:
  
  • The Bible is the only source of faith; it contains the plenary
  inspiration of God; its reading is invested with a quasi-sacramental
  character.
  
  • Human nature has been totally corrupted by original sin, and man,
  accordingly, is deprived of free will. Whatever he does, be it good or
  bad, is not his own work, but God's.
  
  • Faith alone can work justification, and man is saved by confidently
  believing that God will pardon him. This faith not only includes a
  full pardon of sin, but also an unconditional release from its
  penalties.
  
  • The hierarchy and priesthood are not Divinely instituted or
  necessary, and ceremonial or exterior worship is not essential or
  useful. Ecclesiastical vestments, pilgrimages, mortifications,
  monastic vows, prayers for the dead, intercession of saints, avail the
  soul nothing.
  
  • All sacraments, with the exception of baptism, Holy Eucharist, and
  penance, are rejected, but their absence may be supplied by faith.
  
  • The priesthood is universal; every Christian may assume it. A body
  of specially trained and ordained men to dispense the mysteries of God
  is needless and a usurpation.
  
  • There is no visible Church or one specially established by God
  whereby men may work out their salvation.




Luther and the Eucharist

By 1521, Luther had vehemently replaced the doctrine of transubstantiation (which He considered to be the pagan brain child of Aristotelian Scholasticism) with consubstantiation. He taught that there is a change of the substance of the bread and wine, but emphasized that it is symbolical of our union with the spiritual body of Christ. This change must be interpreted not only sacramentally but spiritually and is aimed at the change of the natural man by a common life with Christ.  The sacramental change finds its fulfillment in the incorporation into Christ and fellowship with all Christians. However, all further considerations of just how the presence of Christ comes about are purposely omitted by Luther.

In his The Babylonian Captivity of the Church, he labels the doctrine of transubstantiation as the "second captivity,” which the Roman Church imposes as a matter of faith.(6) Luther rejects it because it lacks the support of Scripture, of an approved revelation and of reason.  For himself, the literal sense of Scripture imposes the belief that the species do not change. He maintained that there is no peril of idolatry in the fact that the substance of bread remains because it is Christ that is adored and not the bread.

To show the reasonableness of his stand against transubstantiation, Luther appeals to an example: "Fire and iron, two different substances, are so mingled in red-hot iron that every part of it is both fire and iron. Why may not the glorious body of Christ much more be in every part of the substance of the bread?"(7)  He sees a further analogy in the Hypostatic Union.9 The Divinity is not present under the accidents of the human nature in Christ. 

In short summary, Luther’s argumentative reasoning for the rejection and denial of the Catholic definition of the Eucharist are as follows:


Transubstantiation is not in accord with the Scriptures.
This dogma is a philosophical explanation based on Aristotelian metaphysics.
It is unnecessary in view of the analogy with the Hypostatic Union and the omnipresence of the humanity of Christ.





http://www.newadvent.org/cathen/09438b.htm
Ibid
Ibid.
See H.W. Crocker III, Triumph: The Power and the Glory of the Catholic Church: A 2,000-Year History
See Phillip Hughes, A History of the Church: An Introductory Study, vol. 3, p. 520
Luther, The Babylonian Captivity of the Church. October, 1520
Ibid.