That error is part of list of the errors of Martin Luther that were condemned as “either heretical, scandalous, false, offensive to pious ears or seductive of simple minds, and against Catholic truth.” Each of these theolofical notes or censures has a specific meaning, and unfortunately, the Pope does not say which theological note or censure applies to each proposition. Likewise, the condemnation of an error does not thereby imply the contrary, but merely a possible contradictory. Further, the condemned proposition must be understood in the sense of the author (in this case Luther).
Luther early on rejected any civil punishment for heresy (especially death) as being contrary to the free interpretation of Scripture (he quickly changed his mind and became even more intempretate than the Catholics in this regard). The fact that a contradictory could exist (many instances of the punishment of death being inflicted were believed to be justified and at least some likely were–see earlier in the thread) means that this proposition would at least be scandalous or offensive and harmful to civil peace. This is especially true since the death penalty for heresy and blasphemy was inspired by the Holy Spirit to be inflicted among the Jews in the Old Testament according to those laws.
As far as society influencing the Church, there is not a problem of this when it is a matter of human experience which increases human knowledge, rather than a particular divine command or revealed truth, which is a matter of supernatural knowledge. The Church still teaches the state can inflict punishments necessary to public order and the common good. It has never had any dogma about particular punishments for particular crimes that applied in all times. As I mentioned in my prior post, the experiences of the people in those times --who were not omniscient–led them to believe the measures they took were necessary for the common good and public order. With more accumulated experience lived in different circumstances, Catholics are now of the opinion that it was likely unncessary (and may have exacerbated things).
Being a Catholic does not give anyone perfect, omniscient wisdom–not even if you’re the Pope or a bishop. It gives us principles and then we must follow our consciences and apply them the best we can in the circumstances we find ourselves in given the facts we know.