According Luther everyone in the world is part of the orders of the creation. Now an even more interesting point (that Oswald Bayer has turned me on to) is that this includes the estate of the Church. Of course not everyone is part of the fellowship of the true Church and therefore saved- nevertheless, they are within the order regardless.
Now, Luther is not trying to say and neither is Bayer trying to attribute to him religious universalism or some sort of heresy like that.
The point is actually quite the opposite: Christianity is the original faith and every other religion is simply a corruption within the visible Church.
Remember, humanity was established in a true Church by God's not to eat of the Tree of the knowledge of good and evil (according to Luther's understanding, God did this to establish a form of external worship) and this was corrupted by the fall. True religion was then reestablished by the protoevangelium, but this promise was also corrupted by subsequent generations. Nevertheless, you wouldn't have any other forms of false religion without the establishment of true religion in the beginning- just like you wouldn't have distortions of marriage or the state without divine establishment of those orders.
This would partially explain his attitude towards Judaism and Islam as heresies, not something entirely foreign. Treating them like separate religions would be to say that the Christianity was one religious reality among many.
This is largely the attitude of most modern people. I suspect this has not a little to do with why they think that there are many paths to God.
In other words, modern people have a big category: "Religion."
What's religion's function for modern people?: Get people in contact with God.
Within this then, there many religions. Christianity is one of them and therefore it becomes one valid path to God among others.
If we follow Luther on this (and Bayer), then there would only be one path to God (the gospel) and then a bunch of distortions of it.
At the end of the day, there would be no room for universalism. Anything other than the gospel would just be a more or less unauthentic version of it. There would be the gospel- and then corruptions of it by degrees!