Well, Margrave is just a title that is given to the lord of a certain subset of region types. This includes cities, strongholds, and townslands. I imagine there was no problem over elections for lords of townslands, just for a city. Yes, it's semantics, but an important distinction. Make sure that when you define your realm's policies, you account for that, otherwise an enterprising duke in a realm that permits appointing Margraves may decide that he wants to appoint his townsland lords as well, even though the people that wrote the law only considered city lords as appointable.
Anyway... Darka appoints everything, as does Eponllyn, Sint, and Astrum. The only realm I am in that elects is Sorraine on FEI. Even though it is a theocracy, we elect lords. So far, we have not run into any situation where we have had a free duchy/margrave position available. (The realm is still fairly young.)
