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Doug,
You nailed it! That is the rare, late war "indirect fire" Luger used to augment light artillery. It fired a small explosive charge and the welded lanyard loop was actually a reinforcement that allowed it to be attached to a horse drawn caisson. Unfortunately, the pintle hook for towing has been ground off the base of the grip.
The charge was not necessarily lethal, but was usually employed around 4:00 PM against British troops to disturb them during tea. The concept was quickly abandoned since this really ticked off the Brits and made them even more effective...hence the rarity of these pieces. Very few were made and many of them disappeared up the backsides of German artillerymen when the Brits over ran their positions.
Hope this helps.
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That's hilarious...I almost spilled my schnapps! 
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"Für Gott, Kaiser, und Vaterland" -seeking: Erfrut Mag 1229 (no script)
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