It seems that Luther isn’t even one of the two topics being considered for Ratzinger Reunion ’08:

The story “does not have any foundation, insofar as no rehabilitation of Luther is foreseen,” Father Lombardi told the Italian news agency ANSA March 8.
Vatican officials said the topic of the pope’s annual summer gathering of former students this year has not yet been decided. Of the two topics under consideration, Luther is not one of them, one official told Catholic News Service

Now. On to the new “Seven Deadly Sins” story.
CWN clarifies:

When he finished his interview with L’Osservatore Romano, Archishop Gianfranco Girotti probably thought that his main message had been an appeal to Catholics to use the sacrament of Confession. Little did he know that the English-language news media would play the interview as a newly revised list of sins.
Archbishop Girotti, the regent of the Apostolic Penitentiary, spoke to the Vatican newspaper about “new forms of social sin” in our era. He mentioned such transgressions as destructive research on human embryos, degradation of the environment, and drug trafficking. Within hours, dozens of media sources were suggesting that the Vatican had radically revised the Ten Commandments, issuing a list of “new sins.”
As usual, a British newspaper leapt to the forefront with the most sensational and misleading coverage. The Daily Telegraph made the preposterous claim that Archbishop Girotti’s list replaced the traditional Catholic understanding of the seven deadly sins:
It replaces the list originally drawn up by Pope Gregory the Great in the 6th Century, which included envy, gluttony, greed, lust, wrath and pride.
Could we have a reality check, please?
When a second-tier Vatican official gives a newspaper interview, he is not proclaiming new Church doctrines. Archbishop Girotti was obviously trying to offer a new, provocative perspective on some enduring truths. The effort backfired– but in a very revealing way.

A CNS summary of the interview
Jim Lackey of CNS blogs on the manufactured controversy
Mollie at Get Religion does a nice take-down of the coverage.
Zadok has a good commentary and also a comment at Fr. Z’s, where the article (in Italian) is posted:

Having scanned through that article it seems that nowhere does the Osservatore Romano report or the Archbishop suggest that there are seven new deadly sins. The number seven is never mentioned, the deadly sins or capital vices are not mentioned, and of course nowhere is it suggested that these ‘new’ form of sins somehow replace the older forms of sin. They’re just new ways of committing the same old sins.

As another commentor remarks, the Archbishop’s point (in this regard – there are other points made in the interview) is that technology and globalization has the power to multiply the impact of our sin.
I am really at a loss to understand the mindset of those writing these ridiculous stories and headlines. I just don’t get where it’s all coming from. 
I mean, given the fact that   Bl. Pier Giorgio Frassati’s body is being shipped to Australia for WYD , doesn’t that tell us that there’s enough Catholic headline-worthy oddness (in the world’s eyes) out there already that you’d think would get their attention without having to make stuff up?
Anyway, more on this last story:

Wanda Gawronska, Blessed Pier Giorgio’s niece, told CNS she was certain that her uncle’s remains would be part of World Youth Day.
“It is beautiful. It is something splendid,” she said.
The Vatican Congregation for Saints’ Causes must give final approval to the plan, she said, but she expects the congregation to do so.
Gawronska said the planning also includes ensuring the safety and dignified handling of the coffin during its transport, as well as complying with international and Australian health regulations concerning the transportation of human remains.
She said young people identify with her uncle “because they have the same problems, desires and interests he had. They see him more as a companion and a friend than as an authority.”

 Christine Wohar, executive director of FrassatiUSA, was visiting Gawronska when news broke about the plans to transfer the body.
She told CNS she realized people outside Europe might find the idea a bit strange at first, only because “we do not really have an opportunity in the United States to venerate the remains of saints. Here in Rome, there is one in almost every church.”
“To me, this is an incredible opportunity,” she said.
“People who know Pier Giorgio love him. It is not a casual relationship; they really love him,” Wohar said. “It will be a comfort and special gift to have him at World Youth Day.”