When considering what Luther wrote concerning Jews, ask yourself what it meant.
In America we take free speech and non-establishment of religion for granted. But in Luther's Europe, establishment of religion was intrinsic to the culture. Christianity was the religion established by the state. German princes were Christian princes. Government was monarchy. Not democracy.
Jews rejected Christianity. They were an outsider culture that refused to assimilate. Jews practiced a religion that teaches its adherents to reject the true Jesus (Yeshua ha Mashiach Adoni). They did this where Christianity was the religion established by the state.
Jewish doctrine was and is false religious doctrine with respect to the Lord Christ Jesus. (Except when it isn't, e.g. Jews For Jesus. But your JDL types claim that Jews who accept Jesus are no longer Jewish. Similar to the claim made by Jessie Jackson types that African Americans who register Republican and vote conservative are no longer black.) In America today, sanctions for false religious doctrine apply only within the church, which is separate from the state. (And on university campuses, where, as always, the left's religion is politics.) In the kingdoms of Luther's Christian princes where the state established the Christian religion, false religious doctrine was punishable not just by the church with excommunication (withholding communion, the cup of forgiveness, unless you repent sin and recant heresy). In the kingdoms of Luther's Christian princes, false religious doctrine was also punishable by state sanctions. (This was also the case in Puritan New England; it is not as un-American as you might think.)
Luther recommended to the princes that they impose harsh sanctions on Jewish blasphemy against Jesus. Burn their houses of worship (because it was there that false religious doctrine were preached), etc. Harsh by American standards. But in Europe, pogroms were routine.
Essentially what Luther proposed were medieval sanctions on blasphemy. I.e., XVI century speech codes.
Speech codes? Where have you heard of those before? That's right! College campuses in present-day America! Civil laws in present-day Canada! Civil laws in present-day U.K.! Civil laws in present-day Scandinavian countries. Etc.
Modern-day speech codes will get you thrown in jail or otherwise punished for saying stuff that offends homosexuals and Moslems. In the old Soviet Union, if you spoke against the state, you were punished harshly. Same thing today in China, or North Korea, or Cuba, or any Communist state. Communism rejects free speech just as God does in Deuteronomy. In Moslem theocracies today, there is no freedom of speech, no free exercise of religion, no non-establishment of religion.
The kingdom of God is not a democracy. God punishes with damnation those who die in their sins. Is there free speech in Heaven? Is there freedom of religion in Heaven?
What government does God ordain for his people in the OT? Theocracy! Not democracy. Stoning for homosexual offenders and adulterers and blasphemers. Not free speech. Not freedom of religion.
America's founding fathers make a good Bible-based case for the natural rights of Man. We are endowed by our Creator with inalienable rights. Free speech, free exercise of religion, non-establishment of religion – it is the American way. I am for it. But don't let's impose on Luther judgments provincial to our own context. His arguments were Bible based, and while some of what he recommended with respect to Jews may seem barbaric to contemporary thought, the same can be said of the punishments ordained by God for His people Israel upon sinners in the Books of Leviticus or Deuteronomy. Or the punishments imposed by Canada for speech code violations, or by American universities for speech code violations. Or by Cuba for speaking your mind. Or by North Korea for standing for human rights. Or by China for practicing your religion. Or by Egypt or Saudi Arabia (death) for converting to Christianity from Islam.
When Jesus returns, he will set things right. Until then, Christians muddle through as best they can with the Spirit to guide them. Luther took his cues from Scripture, from Church tradition, from prevailing cultural customs, from his own zeal for true doctrine, and from his own hatred of lying doctrines. Before you judge him for doing that, take a look in the mirror.