Confession?

So as we've been focusing on Hamlet in class, one part of the play that has really interested me is the idea that if you kill someone as they are repenting, then they will go to heaven. If you kill someone before they have the chance to repent, then they are destined for hell.

"Am I then revenged, To take him in the purging of his soul, When he is fit and season'd for his passage? No! Up, sword; and know thou a more horrid hent... At gaming, swearing, or about some act That has no relish of salvation in't; Then trip him... that his sould may be as damn'd and black As hell, whereto it goes." (III.iii)

I think this is the oddest philosophy ever. So I'm trying to figure out what it's all about...

So it appears that during the time of the play, and shortly before Shakespeare had written it, the Reformation had occurred with Martin Luther against the Catholic Church. Denmark was predominately Christian at that time, and there was a mixture of Catholic and Protestant followers.
From here and here, it appears that if someone confessed of their sins, then they were forgiven. Only in extreme cases were they not, and that depended on the individual that the person was confessing to.
So what does that mean for Claudius when he supposedly repented of his sins? Does it mean he was in fact forgiven or was he still guilty of killing someone?
Why is it significant that if someone were killed during confession, they were clear of any and all sins? I guess just the fact that apparently he was sin-free, having confessed, that he automatically was cleared to get the chance to go to heaven? And how serious of a sin could cause someone to not be able to enter heaven?
Perhaps I'm just questioning something that isn't really significant. I guess it was their belief at the time....