Chip,
It may well have seen service in WWII. Officers were required to purchase their own sidearm. This could have been a private purchase bya junior officer in the Weimar Reichsheer who went on to serve in WWII or was recalled to active duty.
The medals could have been taken from the same officer if he served in WWI. Or even taken from other soldiers upon surrender. None of this can be ruled out.
As for the "tin eagle", it's not likely that a German soldier would use an official insignia to decorate his holster. This practice is known to have been very common amongst U.S. GIs with capture weapons. And probably the same with Australian and other Allied soldiers.
Of course after serving with the Australians in Vietnam, I'm certain that Aussies wouldn't be so bold or assuming as to "bolster their brag "with enemy decorations.
Ron