I think the annoyance was not about lord/earl, it was about [region name] vs [character name]. Almost nobody that I see uses the region name honorific.
Oh, if we go to such specifics, the annoyance of my character was really just about the content of the response by X. Here the little earl shares his interest in such and such values, and asks the newcomer whether he shares those values, and gets a response that translates roughly to "haha, I couldn't care less about your stupid values!" So, of course he can not admit _this_ is what got his precious feelings hurt, so he goes on nitpicking on a preferred form of address that the newcomer has no way of knowing he preferred.
Also, Earl (or the other correct title) is the preferred mode of address; Lord is the vague, "I know you're important but I don't know why" failsafe mode of address for someone you don't know at all.
This might be a language thing then, since English is just something I picked up along the way and found useful. I do not have very intimate grasp of it. In my mind I imagined using "Lord" would be indicative of appreciation beyond the ordinary title. Perhaps I have confused its usage with what you would have in military, ie. a captain could call a sergeant just that, "sergeant Jackson" and it would be quite fine. But if a private did that, there might be a hell to pay, so the private says "Sir" instead. Now of course the convention in BM is a bit different, but just as a duke might call his earl "Earl Kepler" or just plain "Earl", I thought a lower rank might not get away with it.
Similarly addressing government members and such you might (or so I thought) use forms such as "Lord Treasurer X" or "Lord Marshal". So, I figured, apparently erroneously, that "Lord" holds more weight than a specific title. Thus my little earl insisted on that form. In my native language this would make sense, but perhaps it does not translate all that well. Still, even if not grammatically or otherwise coherent, the main point was really to force a specific form, even if it were completely arbitrary, on the perceived lower ranking imagined offender as a response to something the character found insulting.
My characters tend to be a bit edgy. But from the replies gained here I have concluded that the new characters ought to get some slack before being introduced to the depths of one of their more challenging personalities.
