Do Catholics really believe the Pope is infallible? Kind of... but only when he says something they already know.
As a fellow Jesus-classer mentioned recently, lots of times when he asks Catholics for clarification on something, they don't have a better answer than "I take it on faith". This is frustrating to a convert with what seems like an important question! From the outside, one of the most bizarre Catholic teachings is papal infallibility. When I ask, "what's the deal with infallibility?" most Catholics don't really know and aren't bothered by not knowing. This kind of response goes a long way toward ticking me off.
We all know what Papal Infallibility looks like from the outside. It looks like a spiritual dictatorship! And a complete fallacy! Obviously no human being can be correct all the time and world history is littered with some seriously un-Holy Popes. My belief that all human beings make mistakes, even if unintentionally and not in a sinful way, is far stronger than my faith in Catholicism. And so I was very glad to find that Catholics believe that while the Bible is divinely inspired, the scientific and historical "facts", for example, might not always be accurate. Run-of-the-mill Catholics are not fundamentalists. (Don't ask me what Mel Gibson thinks!) So phew! scripture problem solved, but what about the Pope?
It both is and isn't as bad as it sounds. Papal Infallibility cropped up during the middle ages and I'm guessing was a result of medieval politicking during one of the low points of the Church. When monarchs tried to follow Constantine's example of strong-arming the Church, the Popes tried to hold their own with lavish displays of wealth and by asserting infallibility. Of course, rampant corruption ensued. But Papal Infallibility was not officially defined until the First Vatican Council ending in 1870 as a Papal pronouncement with certain conditions including that it must be a matter of faith/morals, it must be pronounced in a certain way (and I don't mean with a certain accent), and it is a belief that must be held by the whole church--i.e. not believing is grounds for excommunication.
Only one such statement has been made since 1870 and this was regarding the "Assumption of Mary"--a doctrine of the faith rather than a moral issue, and this belief had long been taught by the Church anyway. A possible next infallible statement might be to assert that the Virgin Mary is a mere human worthy of veneration but not worship (since devotion to the Virgin Mary is bordering on idol worship in some places). I get the sense that pronouncing infallibility is a last resort and used to smack down heretical challenges to traditional Catholic doctrine. The current Pope Benedict XVI, who has not made an infallible statement, said "The Pope is not an oracle; he is infallible in very rare situations, as we know."
Making infallible statements is dangerous business. The Cardinals pick the Pope, presumably under the inspiration of the Holy Spirit, but there has been at least one do-over! So if a Pope were to make an infallible statement that does not seem infallible to most of the church, it could be seen as obvious evidence that this is a false Pope and might be grounds for a do-over.
Would the Pope make a controversial, "infallible" statement about a heated moral issue, such as whether or not it is a sin to use birth control? This teaching was challenged in the 60s by a papal commission on contraception and the Pope stood his ground, but not with an infallible statement. The point is that the Pope can make faith/moral statements that technically must be accepted, but with the understanding that the issue may be open for debate based on further scientific, theological, psychological, etc. evidence.
What gets confusing is that there are two other forms of infallible statement which have not been defined. One is made by the congregation of Bishops based on teachings that all of the Bishops share, and another includes universal teachings of the Church as a whole. The most obvious interpretation would be that the Church should be following the moral and theological teachings which were held by the whole Church at the very beginning. This is where the sinfulness of birth control is obviously an infallible teaching. However, the traditions of the Church are a different, more confusing, matter; for example, the Mass is no longer in Latin and women are no longer obligated to cover their heads.
So this is Sarah's interpretation of infallibility: there are certain beliefs that are fundamental to Catholicism and so important that for a person to ignore them or not believe means that the person is not Catholic. Some such beliefs are even more fundamental and pertain to all of Christianity. One might say that for Catholics these beliefs are infallible, in that they define the religion and if someone professes their faith in the religion they are also professing their faith in these beliefs and the infallibility of these beliefs. As far as I can tell, all of the infallible statements made in the ecumenical councils, and the statement made by the Pope since papal infallibility was properly defined, have been statements of these sort of beliefs. The statements have been made in response to challenges from outsiders or small factions of believers who have proposed alternative theologies. In these instances such beliefs must be affirmed to protect the faith. In my opinion, this is why these statements are infallible, because they are statements of beliefs that define the religion. Just like saying "a chicken is a kind of bird" is an infallible statement.
Christian morals are based on the 10 Commandments. Thou shalt not kill. We can say that killing is a sin but we can't even say infallibly that killing is a mortal sin because killing in self defense would be venial (i.e. of lesser gravity). We can't say that using birth control is infallibly wrong based on Catholic doctrine because Pope John Paul II's encyclical allows for the use of such pills for medical reasons to regulate hormones under grave circumstances. And recently, Pope Benedict XVI unofficially affirmed that the use of condoms by prostitutes could be a first step toward becoming sexually responsible by stopping the spread of disease, although most definitely not the final step. (Note that the Catholic Church does allow the use of Natural Family Planning to space births.) We also can't say that sexual acts must literally always be both procreative and unitive (one of the arguments against homosexual sex, masturbation, and birth control) because infertile married couples are still allowed to have intercourse (but the image/icon of that procreative relationship must remain intact). And we can't even say that suicide is an unforgivable mortal sin, now that we know more about mental illness.
So, it makes no sense to express such conditional beliefs as infallible, especially since one is still required to follow these teachings regardless of whether or not they are certified infallible. To me this is the Catholic Church at its best; there are fundamental rules but they can be interpreted in a compassionate way and extenuating circumstances can be treated as extenuating circumstances.
At any rate, I have to agree with the Pope on this one; the Pope is not an oracle! But he knows more about Catholicism than the rest of us and, God willing, will do an admirable job of spiritual conflict resolution.