Here's how I interpret Osiander:
1. In Realism, like that of Augustine and Aquinas, being possesses an inherent status before God. God is a desiring subject (hence their doctrine of the Trinity!) and therefore he must recognize being as good, since he is good. Being is goodness and vice versa.
2. Hence the claim of Augustine, Anselm, Lombard and Aquinas regarding the mediatorship of Christ-namely (contra the Formula of Concord) that he is mediator according to his humanity alone. Christ, as a human being, is given the ability through his union with the Logos to make a claim on God (so to speak). The hypostatic union is essentially construed as a way of giving the humanity the ability to merit something from God. Humanity and therefore created being can really do this, because, possessing inherent being and goodness, it can really exist in a way that is desirable to the divine desiring subject. This is conceptualized via Aquinas' description of Christ with a superabundance of created grace.
3. Nominalism disrupts concept of the divine-human relationship. God is an absolute will, he is not a desiring subject. Creaturely being lays no claim of status before him. It is only capable of doing so to the extent that he chooses to allow it to do so- hence the concept of the "pactum" whereby God agrees to value created beings who do "what is within them."
4. Luther as a Nominalist comes to this insight in the so-called Reformation breakthrough: Created being cannot lay a claim on God (self-justification). Hence the only thing that could lay a claim on God would be God himself. Therefore, the "righteousness of God" present in Christ is the only thing that can avail as righteousness before God. Furthermore, since redemption happens because of what Jesus the man does, the Cyrilian Christology comes back in Luther in a big way. Luther says this again and again against Zwingli: only God's death could save us. Only infinite divine being and righteousness present in the human Jesus could counter-balance infinite divine wrath. The divine righteousness of God avails for believers because it is active in, under, and with the activity of the man Jesus. This is the logical consequence of Nominalism's rejection that created being can lay a claim on God.
5. Osiander makes sense in light of his relationship to the previous tradition. He holds to the old Leonine Christology (which divides the person of Chirst), while buying into the Luther's claim that only divine righteousness could avail before God. Therefore he makes the claim that Jesus the man died and released (so to speak) the possibility that infinite divine righteousness would dwell in us and thereby justify us.
6. For Osiander, Christ the man died and that forgave us. That creates the possibility that we will gain through faith, the infinite divine righteousness, which is Christ's only according to his divine nature. He accepts the premise that Christ's humanity does one thing and his divinity another thing. He does not accept the communication of attributes. Therefore he distorts Luther's position because it does not take into account that the cross is the place where the uncreated divine righteousness actualizes itself as a redemptive reality in, under, and with the humanity of Jesus.
7. Therefore, Osiander's actual heresy was to deny the communication of attributes. He did not claim that unio mystica resulting in works was our righteousness before God. He claimed that the divine righteousness present in unio mystica made us pleasing to God- but our own human, created works could not make us pleasing to God. Melanchthon and Chemnitz misconstrued this to mean that sanctification was the basis of justification. Hence by the time of the Formula of Concord, Osiander was remembered as making justification dependent on sanctification. But this wasn't his position. It was the the divine righteousness dwelling in us, rather than the cross made us righteous before God. The man Jesus certainly made justification possible by rendering satisfaction for sins, but it was God dwelling in us that God himself recognized as righteousness. "Righteousness" is a predicate of God's being alone. Therefore he denied the genus apotelesmaticum and the genus maiestaticum. Of course, he also did falsely conflate unio mystica and justification, but that is something of a side issue.
8. This makes him no less a heretic and no less guilty for corrupting the faith. Nonetheless, in a different manner than historically remembered.