My estimation is that Luther meant what he wrote concerning the 1525 Peasants' Rebellion. More broadly, he wasn't politically ignorant, but he was also not really known for flattering those in authority or trying to look good for political leaders against his own views. He knew how to say things in a persuasive way, but I have a great deal of trouble believing he'd go to such lengths to please the princes against his better judgment.

In looking at his writings concerning the events, I think this holds true, that's he did believe what he wrote. There's three important documents here: Admonition to Peace, a reply to the 12 Articles of the Swabian Peasants; Against the Robbing and Murdering Hordes of Peasants; and An Open Letter on the Harsh Book Against the Peasants. All are from 1525, at different stages of the events - the first is fairly moderate; the second, much more extreme; and the third, a response to the criticism he received for the second.

In the first, the Admonition, Luther acknowledged that the peasants had some just cause to be upset; he addressed the rulers:

As temporal rulers you do nothing but cheat and rob the people so that you may lead a life of luxury and extravagance. The poor common people cannot bear it any longer... Since you are the cause of this wrath of God, it will undoubtedly come upon you, unless you mend your ways in time.

To the peasants in the same Admonition he wrote:

You, too, must be careful that you take up your cause justly and with a good conscience... But if you act unjustly and have a bad conscience, you will be defeated.

He continues:

The fact that the rulers are wicked and unjust does not excuse disorder and rebellion, for the punishing of wickedness is not the responsibility of everyone, but of the worldly rulers who bear the sword. Thus Paul says in Romans 13 and Peter, in 1 Peter 3, that the rulers are instituted by God for the punishment of the wicked.

The rulers unjustly take your property; that is the one side. On the other hand, you take from them their authority, in which their whole property and life and being consist. Therefore you are the far greater robbers than they, and you intend to do worse things than they have done.

He goes on to describe and condemn any breakdown of law and order and mob rule, and concluding:

In saying this it is not my intention to justify or defend the rulers in the intolerable injustices which you suffer from them. They are unjust, and commit heinous wrongs against you; that I admit. If, however, neither side accepts instruction and you start to fight with each other - may God prevent it! - I hope that neither side will be called Christian.

Remember, this is from the first of those three writings, the Admonition, which is the more moderate and earliest of them. It was only when this preaching failed and the violence escalated that he then advocated for the princes' use of force to crush the rebellion and restore civil order.

Luther was consistent throughout his career in respecting civil order and had a strong aversion to any civil rebellion, chaos, mob rule, etc. It's easy to mistake him at first glance, assuming in his opposition to the authority of the papacy he cared little for such things, but it's quite the opposite. He valued authority highly indeed; his opposition to papal authority was because he was concerned with higher authority of God and Scripture. His political philosophy was broadly defined by his perspective of the Two Kingdoms - the right-hand kingdom is defined by the Gospel of God's grace and salvation by faith in Christ alone, while the left-hand kingdom is concerned with matters of this world and included (but was not necessarily limited to) civil government and earthly rulers. It's important to note that this is not a distinction between church and state; both the right-hand and left-hand kingdoms are ultimately ruled by God for the good of His people, but one is characterized by Law and one by Gospel.

Primary source: Luther: Selected Political Writings, edited by J. M. Porter