Well, I'm aware that there are people that believe this stuff today. But Jakob Fugger, if you actually read about his life, does not appear to have a moral bone in his body in the Catholic sense. That informed my comment. I personally suspect the village was done for show or as some sort of appeasement, not out of genuine faith.
Separately, I don't think we as a society that strives to be rational, should be open to claims of belief based on faith. I think they should be immediately discarded as arbitrary claims. Just an FYI, let's steer away from that particular topic (i.e. the legitimacy of believing some part of Catholic doctrine).
You are absolutely misunderstanding the medieval mind, and many modern religious minds.
Many people today believe in the power of prayer for the dead to help the state of the souls of the departed. Not a majority, but enough that you probably know a few who don't speak about it precisely because of the incredulity people express when people actually believe their religion, especially Christianity.
Including the people who manufacture the sale of indulences for their own personal profit? Do they really believe in the tenet of having living people pray for the dead? Is the medieval mind capable of such cognitive dissonance? More importantly, is the modern mind capable of it?
This is a soul-buying operation, ironic since Catholics aren't supposed to buy and sell souls.