Do Protestants intentionally misunderstand the Church’s teaching? Catholics don’t believe you can earn your way into heaven.

God forgives all who ask and repentance, a change in conduct, will follow if the person is truly sorrowful; as God has already worked within them through His Spirit to cause them to recognize their sins and need for salvation, He will continue to work within them to bring about a change of character, and thus works.

Given the above, there is no need for a priest to prescribe an act of penance for an individual to receive forgiveness. When this is done, that is salvation by works.

To reiterate, salvation, and consequently forgiveness, is a free gift from God. You cannot earn it and you cannot buy it; if you could, it would cease to be a gift.

An even more egregious example is when the church authorities used to sell indulgences, literally freedom from purgatory for a price. I can't help but think of what Peter said to Simon the sorcerer when the latter thought he could buy access to the Holy Spirit:

"But Peter said unto him, Thy money perish with thee, because thou hast thought that the gift of God may be purchased with money." Acts 8:20

As a side note, while not an act of penance in the typical sense, a formative experience for Martin Luther as he came to understand salvation by faith was when he climbed the Scala Sancta in Rome during a pilgrimage. To quote Wikipedia:

Martin Luther climbed the steps on his knees in 1510. As he did so, he repeated the Our Father on each step. It was said, by doing this work one could "redeem a soul from purgatory." But when Luther arrived at the top he could not suppress his doubt, "Who knows whether this is true?"