Hinlicky's account of the distinction between Luther and Melanchthon on justification is rather unsatisfactory in my mind.
First, I find several remarks that he makes rather odd. Like, for example, stating that German scholarship on Luther has failed to see that distinction between Luther and Melanchthon on justification- for whereas Luther believes justification is forgiveness and imputation plus renewal, Melanchthon just thinks its imputation.
Well, actually German scholarship has been dominated (since Karl Holl) with this particular idea. The idea itself comes from Pietism and holds that Luther believed in something like Pietistic renewal, whereas Melanchthon corrupted justification into pure imputation. This then becomes the position of orthodoxy which were were rescued from by Spener (thank goodness!).
Hinlicky changes the sorry a little bit. He's fascinated by the spell of the Finns and he's now taken over this into their new version of this narrative.
In the Finnish version of the Pietist/Luther Renaissance narrative, Luther believed in mystical union so much that he collapsed justification into it. Melanchthon had a more prosaic mind and unfortunately held to a mere forensic justification. This was accepted by the Formula of Concord and all Lutherans since have been duped into believing in forensic justification.
Couple of points. Hinlicky compares pre-reformational Luther quotations (1518) to Melanchthon of Loci Communes 1555. In other words, these are apples with oranges. What about the Disputations on Justification of the 1530s? Doesn't Luther say there, when asked by Melanchthon to define justification, say "it properly means the forgiveness of sin and the imputation of righteousness" (i.e. it's purely forensic!)? Why yes he does.
Jim Nestingen does a similar thing in a few articles when he compares Luther's statements about the law of the early 1520s, to Melanchthon's of the 1530s. He uses this to claim a distinction between them on the doctrine of the law. But in one case, Luther is fighting the Church of Rome. In the other, Melanchthon is fighting Agricola. Why don't you compare Melanchthon's later statements to Luther's statement in the Genesis commentary, Galatians commentary or Antinominian Disputation?
This also relates to Hinlicky's other claim that there is not ordo salutis in Luther of law first and then gospel. Problem: First, if you believe this, then why didn't you cite a single text proving this? Secondly, again, reading the end of Galatians commentary when he describes the function of the law in the Christian's life or Antinomian disputations, this doesn't make sense. If you read those, it sounds very much like there is a ordo salutis of repentance based on the law and the faith in the gospel. It also, really, really sounds like accepts a third use of the law.
What about mystical union? Yes, of course Luther emphasizes it more, but it was an emphasis of Lutheran orthodoxy as well- remember them?- those Melanchthonian infected theologians who ruined the whole tradition? Want theosis? Gerhard says that it was the reason for the Incarnation! He states this also that the beginning of Sacred Meditations, quoting St. Athanasius. He also says it alot in the new translation of the Theological Commonplaces Exegesis IV.
Argument of the Finns is that mystical union and justification are conflated, something the FC denies. But how could it be any different? After all, Luther says in the Large Catechism that we are justified before we ask for forgiveness. In other words, the pronouncement of the promise is that our sins are already forgiven and that's what causes faith. If justification there already before faith is created, how could one conflate the mystical union (which is a result of faith) with something that happens before faith?
Lastly, Hinlicky states that both Melanchthon and Luther believe in forensic justification in the sense that both believe that one is not saved for one's own sake, but on account of Christ. Then how can there be a distinction on forensic justification between them? In other words, it all comes down to how you use words. If by justification, you mean standing as righteous before God, then you've just denied that Luther believed that renewal had any to do with rigtheousness before God and that in the end justification for Luther doesn't really also involve inner renewal. If you simply mean the whole redemptive process, then again, Melanchthon also believes in sanctification- so where's the distinction?
The truth of the matter is, that Luther and Melanchthon had difference on free will and the Lord's Supper. Otherwise, the differences are matter of emphasis, not teaching. Bergt Hagglund showed this a long time ago. He demonstrated that all this was a fiction of modern German Luther scholarship after Holl. Lowell Green has also admirably shown this in How Melanchthon helped Luther Discover the Gospel. As far as I can tell, there is zero difference on the question of justification.