These are just my thoughts, might not be the best answer...
*scratches head* This is complicated...
Elected before time, justified in time, set apart as perfect in Jesus Christ before time, still seen as sinners in time...
Totally depraved, yet holy...
One thing that might help, is to consider the statement "before time" more closely. It is not meant to be a description of a chronological order of events. When we say that God elected to save his people before time began, the emphasis is that God did not decide to save His people in reaction to the fall. Rather, the fall was part of God's redemptive story which was conceived in the mind of God
outside of time.
In other words, there was not a point in time when God decided to create the world and save a people for Himself. God exists outside of time. He has always, as part of his being God, determined to unfold His redemptive plan.
Prior to His creation of the world, I don't think we can say there was linear time. However, upon his creation of the world, God interacts with time in a linear sense. He has written himself into the story. He dwelt with man in the garden, he spoke to the patriarchs and the prophets, he became a real man, and his Spirit dwells within us. I would even say that in response to our prayers, he actively works within time. It is also very important to understand that the covenant is the format by which God deals with us in time.
I think that when God views us, he doesn't view us as say, Brad in 2006. He views the complete span of my life, from my time as a sinner, to my conversion, to my sanctification, and my glorification. In each of these stages God sees Christ. As a sinner, he sees Christ accursed in my place. As a believer, he sees me as walking in covenant with him, but united into the covenant with Christ as my head. When I sin, he sees Christ as the keeper of the covenant. And the beautiful part about God's eternal decree, is that when he views me he sees my future glorification, when I will be made new and unable to sin. At that point, he sees me as united to Christ as by marriage, a part of the church, the glorified bride of Christ.
It is not for us to know the mind of God, or his eternal decrease. We cannot place ourselves outside of linear time in order to understand fully what it means for God to view us based on his eternal decrease, and how exactly those interact with our timeline. He has, however, given us a glimpse into his eternal plan via the completed revelation of the scriptures. We have the finished story, albeit abridged, which suffices to tell us everything we need to understand for our salvation and sanctification.
I would also like to disagree with Mr. Luther (not sure in what context he said that). I don't believe the Bible ever tells us to sin boldly. However, we are told to draw near to God with confidence because of the blood of Christ. So even when we sin, we can be bold in continually submitting to the grace of God in Christ.