This doesn't feel accurate to what the Catholic church would say about its own policy. I think they would think of blasphemy in the same way that we might think of infohazards, or extremist political rhetoric—not dangerous because it's true, but dangerous because of how some susceptible people might react to it.
[correction] "You are not allowed to teach that Purgatory is not part of Catholic teaching, because it is."
Martin: "Why should I not be allowed to teach it? I am allowed to debate it in the classroom."
"The disputations are one thing. Public tracts are another."
"You're just mad because I called you corrupt."
"Yes, that makes it easier to want to suppress you. Though we never officially censor people for saying that."
Martin Luther: "The Catholic church is corrupt."
Johann von Staupitz: "You cannot say the Catholic church is corrupt."
Luther: "I just did."
Staupitz: "I mean you are not allowed to say it."
Luther: "According to whose authority? Certainly not God's, for He has yet to strike me down."
Staupitz: "Upon Pope Leo X's authority."
Luther: "Pope Leo X is far away, in Rome."
Staupitz: "Upon my authority, then."
Luther: "I notice that the truth value of my claims do not enter your calculus."
Staupitz: "To the contrary, the truth value of your claims very much do enter my calculus. Were you to say something obviously wrong, like 'space is non-Euclidean' then I need not persecute you. I could simply say 'Martin Luther is wrong'. False claims are self-defeating. Heresy is scary because it might be true."
Luther: "What will the Pope do to you if I speak blasphemy?"
Staupitz: "I don't know. I have never allowed blasphemy within the Order of Saint Augustine."
Luther: "Let me get this straight. You're forbidding me from speaking the truth because you're afraid that someone else will punish you for being associated with me for speaking the truth."
Staupitz: "Yes. That's because I'm one of the good guys."
Luther: "The good guys suppress free speech?"
Staupitz: "Yes. The bad guys burn their enemies at the stake."
Luther: "Heretics must be flourishing if the Catholic church burns them at the stake on a regular basis."
Staupitz: "To the contrary, nobody has ever been burned at the stake for declaring the Catholic church corrupt and translating the Bible into German."
Luther: "Let me get this straight. You're suppressing free speech because you're afraid the Catholic church might suppress free speech."
Staupitz: "Precisely!"
Luther: "What. The. Sard."