Layover time in Frankfurt

Sounds like this is 2 separate bookings. Correct?

If so, I would be planning on carry on only.

What is the on time record of the ATL-FRA flight? When are you planning to go? Is it a time that T-storms are likely in ATL?

Arriving on time is critical

Collecting baggage will add 5 minutes or less to your journey. Are these separate bookings?

Yes - separate bookings. Not understanding how baggage claim only adds 5 minutes... Would love if this is true but we would have to wait for bags to come off Delta flight, collect from baggage claim, change terminals then recheck bags onto Lufthansa & clear security again, correct? Or am I missing something?

Collecting baggage at any airport I have ever been through anywhere in the world ads not less than 30 minutes to the process. Sometimes an hour or more. That's why I make do with only carry on unless there is absolutely no other way.

Baggage claim will be part of the immigration passport check and customs clearance as you arrive from your Delta flight since you are on two separate tickets. Yes, from my experience in Frankfurt you will have to recheck your luggage and go through security at the other terminal to get to your connecting flight.

However, I feel that a full 3 hours is enough as long as your flight in is not late.

Looking for advise from anyone who is familiar with Frankfurt airport.
We are schedule to arrive in Frankfurt from Atlanta on a Delta flight
at 0900 with 3 hour layover before a connecting flight on Lufthansa to
Hamburg at 1200. We realize this involves a terminal change and
passport control prior to the Lufthansa flight. Is there enough time
for baggage claim as well or do we need to plan for carry-ons only to
avoid the delays at baggage claim? Thank you in advance!

Two separate airlines means you are not connecting. Frankfurt Airport is a stopover. I would have allowed 4 hours as I always do when I fly into a European airport as only a stopover; my stopover airports are Amsterdam Schiphol and London Heathrow. If you have already bought your tickets and they are nonrefundable, do not check in bags.

Fly with carryons only to avoid the waiting time at the baggage carousel and the need to check in your bags at the Lufthansa ticket windows at the other Terminal which is Terminal 1. If your inbound DL flight arrives late, eliminating the built-in delays with checked in luggage will be necessary. You can get to Terminal 1 via the monorail which is quick and easy. Check in to your Lufthansa flight online before you leave the US so you can walk with your carryons directly to passport control and security once you arrive at Terminal 1. Good luck! Keep in mind, Lufthansa might close your flight to Hamburg 30 minutes before departure so you won't have 3 hours to catch that flight unless your DL flight is early.

Not understanding how baggage claim only adds 5 minutes.

I think the expectation is that it will take so long to go through immigration, your bags will be waiting for you by the time you get to the bag claim area. Its the re-checking that adds time in your case.