I used the Lufthansa 48 hour reservation with Price Guarantee option on the Lufthansa website yesterday. I then decided to go ahead with the booking and completed and paid for the flight on the same site. However, my credit card appears to have been charged the £27 for the reservation as well at the cost of the flight. Is this normal, or should the £27 only have been deducted if I didn't book within 48 hours?
As long as you confirmed the reservation through the My Bookings page, and haven't made a completely new booking, you don't have to pay the reservation fee.
More likely the credit card transaction, that you see is only a hold and not an actual deduction. The hold should disappear in a couple of days. If not, then you can dispute that transaction with the reference to the conditions of the reservation guarantee.