I agree that he MAY have a see-saw relationship with the following vicars of Christ, Greg did see him as a way of recatholicizing Germany by example rather than by war. Also Henry VIII (his one time uncle by marriage) was KING (slightly outranking a mere duke) and thus his loss to the Catholic fold, followed by much of the anticatholicizing of his country was a little bit more unsettling than some petty German duke - pope's champion or not.
Another thing to consider is that Bavaria's dukes didn't do much in the way of spreading the True Faith because they were more concerned with being made first Electors, then Holy Roman Emperors or a king of somewhere. Even Max I's entry into the TYW was entirely political. So why wouldn't Karl Friedrich and his line do the same?
But it still brings me back to one of my earlier questions, without inheriting the Rhineland, will it be Brandenburg that still unites Germany? Or perhaps a Wittelsbach/Wettin?