Things worked great until the auto-"fix" was added in recently.
But as it is with the auto-"fix", dukes couldn't even give regions away to the ruler even if they wanted to.
As I said: When the current state of affairs and the rules of the hierarchy are in conflict, the hierarchy wins.
Rulers
can not be Lords without also being Dukes. This is not negotiable.
What
may be negotiable is finding a way to get Rulers into both a Lordship and a Dukeship at the same time, if a good way can be found to do this.