Is it true that the Church granted indulgences only if people could afford them?
here are several good sources on Tetzel, but most are not in English.  The article on him in the in the online Catholic Encyclopedia gives a good bibliography.  There is also some material in the article on Martin Luther.  Also in this article by Dave Armstrong.  Another good source of information is in the full five volume work Martin Luther by Fr. Hartmann Grisar, which was translated into English in the 1930s.
The indulgence was so designed so as to raise money for building a new Church on the Vatican Hill to replace the decaying basilica erected there by Constantine in the 4th Century.  People were encouraged to make a donation towards this enterprise and they would receive a plenary indulgence.  The amount was not specified, though it was expected that people would make a donation in proportion to their income.  If they could not afford a donation, they could pledge prayers for the success of the project.
The indulgence was specifically meant to remit the temporal punishment due to sins which had been previously confessed and forgiven.  Since it was a plenary indulgence, there was the requirement to be recently shriven, to be in the state of grace, to have received communion, and to pray for the project in order to fulfill all requirements.  Was this the "sale" of indulgences?  Not really.  What was solicited was a donation, not a set "price" for an item on sale.
There were several other conditions for the indulgence that also had to be met which were basically devotional in nature.  Soliciting donations in this way was not unusual in those times, but it is obviously far from ideal and open to abuse.  It was because of this specific scandal that the Church has since forbade ever connecting indulgences with donations.
You ask what I meant by "We are also told that SOME of the people sent to offer the indulgence to the peasants used slogans, over-simplified examples, and other techniques to speak down to the crowds to entice them to make donations." Frankly, I think the answer is obvious.  A pitch is a pitch after all and that hasn't changed since the first street peddler hawked his wares in old Jericho.  What I believe the sources refer to is that among country folk, the indulgence was more successfully offered with a more theatrical approach than was used in more educated or sophisticated circles.  This may have gotten out of hand leading to "improprieties at the grass-roots level", such as claims that the indulgence actually forgave sin or that it could be applied to future sins.  None of this was ever attributed to Tetzel.
My reading says that Tetzel was an excellent orator and could move the crowds.  It also seems that he was not above a bit of theatrics with banners and outward accoutrements like the Papal coat of arms.  He also used small poems and slogans (my sources do not specify them) though NOT the infamous one that is usually attributed to him about the "penny in the coffer".  But he was a well trained theologian and his preaching about the Indulgence was above board in its day.
He held to a controversial theological opinion which was later condemned by subsequent Papal teaching.  That is, he believed that the person obtaining an indulgence for a loved one did not need to be in the state of grace.  This was a respected opinion held by several theologians in the school where Tetzel trained and he was within his right to hold to it.  The investigations found no fault on Tetzel's part, though it did uncover abuses and misrepresentations by others.  Tetzel became the focus of the scandal because he was the one offering the indulgence near Wittenburg and was the object of Luther's attack.
Could you please tell me where I could find the directives and standards imposed by Fr. Tetzel and the German bishops?  I am sure my skeptical friends will want to see these directives for themselves.  Can you also tell me when they were declared O.K and by whom?
I recommend to you the definitive work Johann Tetzel der Ablassprediger (Mainz, 1899) by Msgr. Nikolaus Paulus.  I think you will find what you need there.
Omnes semper - ad Jesum, per Mariam, cum Petro!
Art Sippo
June 12, 2002