I believe the key to the enlightenment you seek ... er... to understanding Luther and Lutheranism, is in having an understanding of Christianity, Catholicism, Protestantism, European culture before and during the Reformation Period, etc.
I'm not trying to start any arguments, but when I see a statement like "I live in an area dominated by Southern Baptist Churches. They, quite literally, drive every other out of town." it sends up one of those flags that makes me wonder if all
the person knows about Christianity in general, and Fundamentalism in particular, is what they got from the popular media (which for the most part casts Christianity in a negative light, and the more conservative the church, the more negative it's portrayed.) I mean no offense to you personally, your asking for assistance is evident of a more open mind and a desire to "get it right" -- but I have seen so many people who obviously didn't know their ass from a hole in the ground when it comes to what Christianity is about pontificating on the internet and their pronouncements are ... well ... it looks like all they really know is what they see on television.
Remember that unlike today, the (Catholic) Church was an integral part of life in the Middle Ages and through Renaissance times. It permeated every element of society in a way that's difficult for modern people like me to understand. (After all, how could a Prince wage war against the Pope but still be a good Catholic? It was possible.) In pretty basic terms (and yeah, people who know their theology and church history, etc, can nit pick this to death) the Church said "these are the things you need to believe and do in order to go to Heaven instead of Hell." Catholics believed and taught from all sorts of sources in addition to (some would say instead of
) the Bible -- most notably what popes past and present said and wrote, and what other theologians and priests wrote that the Church decided was okay. Luther took his work seriously, and was deathly afraid he would never be good enough to go to Heaven. In his search for answers, he came across something he believed was counter to the teachings of the Church. The Bible was the source of this discovery - that nothing anyone does is "good enough" and that salvation is the result of faith alone, and not a laundry list of things a person has to do and hope they're doing them good enough. Needless to say, this was a great relief to someone who took Hell seriously, and was on the verge of insanity as a result. (Think about it - the Christian view of Hell - who in their right mind wouldn't go crazy if they thought they might be going there?)
So, he set about attempting to "reform" the Catholic Church (as so many have done before and since) by writing down the stuff he believed should be changed. And as happens, some in the Church hierarchy took offense and persecuted him. As stated before, the idea of believing something different wasn't new, and Germany was a place in which many of the nobility weren't in agreement with a lot of Church policy (or politics), and so evolved the development of the "Lutheran" Church in Germany.
How is Luther remembered and portrayed within the Church? He is held in high regard, but he is not a "cult figure" the way some founders are treated in some churches that are ... well ... cults. He didn't name the church after himself. He didn't even want to start a new church, but to fix the
Church. Nobody will deny any "negative" historical facts that come to light - for instance, his antisemitism - but that wasn't an uncommon feeling among Catholics at the time either. As I said, he was human, and a product of the time and place in which he lived. At the same time, he was a man of courage and conviction. After all, he knew he would be put through the wringer by the Church when he was called on to answer for what he had written, he knew he would probably be imprisoned, but he answered the summons. When pressed for an answer, he followed his convictions instead of taking the easy way out: "Unless I am convicted by Scripture and plain reason, I do not accept the authority of popes and councils, for they have contradicted each other. My conscience is captive to the Word of God. I cannot and will not recant anything, for to go against conscience is neither right nor safe." According to tradition, Luther is then said to have spoken these words: "Here I stand. I can do no other. God help me. Amen."
Also, a word about calling Lutheran clergy "priests" -- I don't know that there aren't branches of the church where they are called priests, but for the most part they're not -- the basic idea being that a "priest" is required to represent a person before God. For most Protestants one of the main ideas of protestantism is that a person can go before God on his own without the need for clergy - or to be even more technical, Christ fills the role of the priest, representing the sinner before God. Yes, another one of those things someone can nitpick me to death on, but I'm talking "in general terms".
I sincerely hope this helps and wish you luck in your endeavours.
These are the three best sources I could find in a hurry, and I doubt I could find much better if I continued looking:
About Luther and the founding of the Lutheran Church: http://www.theopedia.com/Martin_Luther
Something a bit more involved, but lots of useful information - Lutheran Beliefs and Practices: http://www.lutheran-resources.org/lutheran_beliefs.htm
And a little something about Lutheranism in modern Germany: http://www.nytimes.com/2012/08/12/opinion/sunday/in-euro-crisis-germany-looks-to-martin-luther.html?_r=1&
(It's from the New York Times, not exactly an unbiased source of information, but I read it and it looked okay.)