Hoefler says indeed that in old High German, the word meant bracelet and that it was eaten for Lent. He also suggests that it was linked to the cult of the dead – the salt was to chase away demons, the bracelet shape suggested objects put in the tomb (as other pastries suggested braids, pieces of money, etc). Conversely, another writer says that in Alsace pretzels were handed out to celebrate a birth. Another story is that a lord, offended by an insolent subject, said “You will escape the gallows if you give me a biscuit through which I see the sun shine three times.” (The association with the Trinity may only be implicit here, but I believe others suggest it more explicitly.)
In Alsace, pretzels are often made with cumin instead of or with salt. In the 19th century, Austrian bakers considered the pretzel a fine pastry just like the kaisersemmel (kaiser roll) or the kipfel (croissant), and so a luxury item. Austria of course also has the salzstangl, essentially a stick-shaped pretzel.
Drill down into it for some very interesting pictures of unusually-shaped pretzels.
UPDATE: My good friend Gerhard counters with this:
Over here it is not considered a fine pastry. It’s more like what rural people like farmers eat… hence the connection with beer. Same thing with Kaisersemmerl… the name only refers to the special form of the roll, not to it being a fine pastry. The Kipferl is indeed something of a luxury item… be it a Butterkipferl or a Mürbes Kipferl. The Salzstangerl on the other hand is a stick-shaped roll with very little coarse salt and cumin-seeds on it and has otherwise nothing to do with a Brezel since it’s simply baked like a roll.
Having said that, all these items have changed in recent decades as tastes have changed. A Salzstangerl today is loaded with salt and tastes like a totally different thing. A Kaisersemmerl once was a “slow” handmade thing, today it’s all machine-made. Also, these rolls once made a cracking sound when you broke them in half. Today they’re silent. Very sad.
Here’s a good website on Brezel and the history… in german, but maybe Babelfish or another translator works: http://www.brezel-baecker.de/brezelgeschichte