Is it true that Luther removed James, Jude, and Revelation from the New Testament? If this is true then what were his reasons for doing so?
Martin Luther disliked James, in particular, for its emphasis on works. He called it his "epistle of straw." That said, there is simply not a mechanism for removing anything from the canon in Christian circles.
Likewise, of Revelation, Luther said:
About this book of the Revelation of John, I leave everyone free to hold his own opinions. I would not have anyone bound to my opinion or judgment. I say what I feel."( Luther, M. (1999). Vol. 35: Luther's works, vol. 35: Word and Sacrament I (J. J. Pelikan, H. C. Oswald & H. T. Lehmann, Ed.) (398). Philadelphia: Fortress Press. )
In other words, he didn't like, but again recognized his own inability to edit the canon.
The canon is simply the consensus on what is best. The marks of canonicity are settled, insofaras there is basically consensus. (Okay, there is a question about those 7 books between Protestants and Catholics, but it is a very, very minor point) Indeed, if Luther were to publish "his canon" at best he could only have said, "this is Luther's canon." And there is evidence he wished he could, but again, he couldn't.
I have no doubt that Luther preached very rarely on these books - but he simply did not have the standing to "remove" them from the canon. It would be like one person saying, "Harry Potter is not on the best sellers list." He might think it shouldn't have been, but he simply doesn't have the standing to say.
Finally, there is a deragatory term "canon within the canon," which refers to a person's favorite books within the canon - the ones he or she may elevate over others. That Luther suredly had. His canon within the canon was Paul's epistles - but that doesn't mean he could downgrade the status of the others.
Mainly it is my understanding that, as @Affable Geek stated, Martin Luther wanted to remove these books from the Bible, but unlike his adoption of the Hebrew (what is called the Protestant Canon) texts over the Septuagint (what is now called the Catholic or Orthodox Canon, which contains the Deuterocanonical books in addition to all those of the Hebrew/Protestant Canon) for the Hebrew Scriptures/Old Testament of the Bible, there was no option for an alternate NT canon. It just didn't exist, and was NOT possible.
Why would he want to do this? I think it's simply because he didn't like that several books of the NT canon (esp. outside the writings of St. Paul) could be used as counter-evidence against his beloved children of sola scriptura, sola fidae, and sola gratia. (He also had kids named solus christus and sola deo gloria, but a lot of people don't talk about them so much any more unless explicitly Catholic or Orthodox bashing, as they now get lumped into the other three solas).
But as pointed out by Affable Geek, just because he wanted to get rid of these books and their status as Christian Scripture, didn't mean he could do that. Canonicity was determined by the Church during its childhood... and Luther had to be very careful, as attacking the early Church's ability to determine canon at all would also undermine the authority of the very scriptures he was using for that tenet of sola scriptura... a sort of theological catch-22.