The observance was certainly marked in Germany in 1917, especially as Luther had by then become as much or more important to Germans as a symbol of German-ness, of language and culture as much as for religious reasons. In America too, just like this year many churches held special services to mark the occasion, as well as larger synodical celebrations. But indeed, it was relatively muted because of the ongoing war, both in Germany and among Lutherans in America.

Here's a recollection from Hermann Sasse, remembering it in 1942:

I still remember that cloudy, misty Autumn morning in northern Germany. The Divine Service in the open air would be for many of those present their last celebration of holy communion. Straight after the celebration, we were plunged into one of the bloodiest battles of Flanders... Surely that Jubilee deserved something better. But with it there arose a new appreciation of the central article of faith of the Lutheran Reformation. It is as though the tremendous gravity of war, the encounter with death and the experience of God's judgment that it brought, were needed for modern man to grasp again the message of the Reformation: the justification of the ungodly by faith alone.

For Lutherans in America, there was strong pressure to be less German and less distinctive. For example, in 1912 around 80% of Missouri Synod churches still offered services in German; by 1920, that had dropped below 25%. This atmosphere hampered such celebration, and led to a certain tone of those commemorations that did happen. I searched the New York Times archive and what I was most struck by was how thoroughly the subject was ignored. An article did appear in the New York Times, November 5, 1917:

Says Lutherans are Loyal: Prof. Remoser of Concordia Declares the Church is for America.

The Lutheran Church is for America, Professor G. A. Remoser of Concordia College, told a congregation at the closing meeting tonight of the week's celebration of the 400th anniversary of the Reformation. "The Lutheran Church is no foreign church," he said. "We are in America. We are of America. We are for America. The Lutheran Church is wedded to no language."

Pastor Pennkoke, of a Lutheran Society in New York that commemorated the event with a dinner October 29, 1917, also pointed out (New York Times, Oct. 30, 1917):

the difficulties attendant on the event in view of the fact that "a world war was usurping the interest of all mankind, and this country was at war with the people in whose bosom the great Reformation struggle began."

And finally, on October 31, 1917, Reformation Day itself, a German Evangelical League from Wittenberg (I don't know anything else about that) was quoted in the NYT for

a manifesto in which the militant sayings of Martin Luther are applied to present day events. The manifesto rejects pacifism and thunders against the Pope's peace proposals as being invested with no religious authority. It concludes: "We especially warn against the heresy promulgated from America that Christianity enjoins democratic institutions, and that they are an essential condition for the kingdom of God on earth. As Luther said, 'The freedom of a Christian does not depend on the forms of government which are shaped by historical developments and the accumulated experience of nations.'"

I couldn't find anything else about this league or manifesto... I'd be very interested if anyone uncovers more about that. But its own content or the unknown accuracy of the reporting notwithstanding, I think the NYT article itself shows a predisposition against Germans, in its language of "militant sayings" and "thunders against".