Generally, most orgs that I am familiar with (probably very few in the grand scheme of things) consider one a 'master' when they've reached a rank where they realisically know and can teach the entire curricula of the style or system, which doesn't sound nearly as grandios as the term, 'master' makes it sound. I agree with you 200% regarding the rank/title chasers.
As far as grandmasters go, the title is so commonplace now that it hardly holds any real meaning. Personally, I think that the title should be reserved for:
1) School owners who have multiple masters teaching at their school, though i think that the title of headmaster would be more appropriate. In fact, if I'm not mistaken, this is what the term, "kwan jang" actually means; head of school.
or
2) School owners who own more than one school with a master or masters running each location. In this sense, the grandmaster is essentially a general manager, which incidentaly has the same initials.

Personally, I think that unless the owner of two or more schools has developed his or her own style, system, or established their own independent org (see example 3), then they should simply be the school owner, master such and such. If they own four schools, all doing, say IKF kendo, under the IKF, then they are simply a master who is also an administrator. Perhaps the title of 'Dean' might be more appropriate?
or
3) This is really the most appropriate use: the head of a style or organization that presides over and provides direction to ... well.... multiple masters.
In any case, most of the words that get translated as, 'master' either directly translate to, or would be more appropriately translated as, teacher.
Daniel