AFAIK early on the main effect of Protestantism was to trigger a whole wave of apocalyptic preachers, cilialistic peasant revolts, emergent weird sects, and other such merry unrest. Political leaders, such as Gustaf Vasa of Sweden, only began adopting it a bit later on; for the timeframe of M2TW I figure treating it as widespread and intense heretic trouble is a reasonable and sensible enough solution.