I'll log in for just a second to help out here. I've been having this argument with Stubborn for many years.
Problem here is the equivocal use of the term "Catholic".
That Luther remained Catholic simpliciter, nego. That Luther remained Catholic secundum quid, concedo.
Basically, those who have the indelible mark of Baptism remain Catholic in potentia but not in actu. This remaining Catholic "potentially" does not translate to his having remained Catholic actually.
Finally, what's really at issue isn't his loosely having remained "Catholic" (in some sense not yet defined here in this argument) but about the criteria for membership in the Church. When I argued with Stubborn, I held that no Catholic theologian has ever held that the Baptismal character alone sufficed for membership in the Church. I was mistaken. In his thorough survey regarding the theological history of membership in the Church, Msgr. Fenton pointed out that one theologian held this position, but it pretty much died with him. There are also a small handful that maintained, for instance, that occult heretics lost membership in the Church, but that opinion too was almost universally abandoned.
After Trent and St. Robert, nearly all theologians held that the requirements for membership in the Church included: 1) Baptismal character, 2) profession of the true faith, 3) formal subjection to the Supreme Pontiff, 4) not having been (justly) excommunicated. According to St. Robert, and pretty much everyone after him, those who lack even ONE of these criteria were not members of the Church.
So, remaining a Catholic "in potency" is why (in some cases .. not all) a heretic may approach the Sacrament of Penance. Now, this individual of course would be absolved of the SIN of heresy, especially if the heresy had never been manifest in the external forum (i.e. remained occult). Returning to the Church, depending upon the notoriety of the heresy, might tacitly entail a restoration of professing the faith (see criterion #2 for membership), but in other case (with greater notoriety), a public profession may be required to restore membership in the Church.
So, St. Robert, likening the Baptismal character to a brand (say, on a sheep) states that once the sheep has been separated from the fold, the brand (mark) simply indicates that the sheep USED to belong to the fold, even if it's no longer actually a part of it. Now, the owner, by virtue of this brand, can still claim legal de jure ownership of the sheep, but it doesn't change the fact that it's now de facto no longer actually part of the fold (yet another distinction here). Now, with the discovery of modern science, we can liken the character to DNA. If a part of your body (say, a finger) gets chopped off, it's no longer part of the body, but the DNA indicates that it used to belong to the body and used to be part of the body, but now that it's been separated from the rest of the body, it is no longer in a position to be kept alive by the body's animal soul, and is therefore severed. It can no longer function as part oft he body, while retaining this characteristic that identifies it as having once been part of it.
As for its concrete application to the pope question, we don't really know why Cajetan, for instance, held his deponendus position, i.e. whether he believed that there could be some partial membership in the Church or whether he believed that being Catholic in potentia (in potency) sufficed to retain jurisdiction in the Church.
Now carry on.
Bottom line here is that no one is defining the term "Catholic" being thrown about or making the proper distinctions regarding the term.
Being "Catholic" in some loose sense vs. membership in the Church.
Being Catholic simplicter vs. secundum quid.
Being Catholic in potentia vs. in re.
Being Catholic de jure vs. de facto.