Let's say the wiley old cardinals of the 14th century decide to try co-opt Martin Luther rather than fight him after the Diet of Worms and nominate him for a cardinal position in southern Germany
How could they make Luther accept and how does this effect his movement if he does?
I think you mean 16th century.
Cardinals were not appointed for specific regions.
The way I think Luther may have accepted is if a new Pope had appointed him with the explicit promise to task him with the preparation of a reform Council.
The Pope could then try to slug things down, or maybe he doesn`t even have to, because Councils rarely really came to far-reaching agreements those days, and Luther´s ideas wouldn`t be embraced by a majority.
Either way, some of those with similar ideas like Luther might also get involved in the conciliar process, while others may turn away. It would certainly absorb and weaken a lot of the impetus.