Lutheran scholar Michael Root wrote an article in the December issue of First Things (okay, so I like this journal) on the once-hot topic of indulgences. I'd recommend this article to anyone who's interested in how another Christian views the theology of indulgences.
Early on in the article, Root points out that "indulgences were not, as Protestant polemic asserted, the invention of cynical church princes to bilk the credulous, but an institution invented by no one, the creation of a series of incremental changes that occurred over centuries."
He also says this near the end: "Recent Catholic teaching, especially the various texts related to the Jubilee, go far to situate indulgences within a genuine pursuit of repentance in daily life and to remove the rather impersonal, quid pro quo transactional language that has sometimes been associated with them. These recent discussions of indulgences are in fact far closer to the first of Luther’s Ninety–five Theses on Indulgences—which stated that when Jesus called for persons to repent, he "willed the entire life of believers to be one of repentance"—than are most recent Protestant statements on the Christian life."