My wife is Japanese and we have had this discussion. This is definitely an American thing, and I do believe you are right about honest ignorance. Plus, the truth is, Americans love titles. Even if they don't fully understand their meaning or even if they are using them in the right context. My teachers who have been in the art for a long time don't get too wrapped up in the honorifics. As I mentioned, sensei is just fine. Another interesting thing in regard to American MA schools is how they use the term sensei. I see many putting sensei in front of their name where it traditionally follows it "Smith sensei" vs Sensei Smith.Renshi, kyoshi, and hanshi are not really titles to be used as a form of address. They are more like achievement awards. One wouldn't greet a top college graduate as, "Hey, cum laude Smith." In some circles it may be OK to address a very senior blackbelt as "Shihan."
Such misuse of terms as quoted above are often done out of honest ignorance, sometimes simply following the example of their own teacher who is ignorant of such matters of their art. Using such terms in Okinawa or Japan this way would certainly lower one's perception of your TMA knowledge and even character. Someone rising thru the dans should educate themselves on the art they represent.
My aikido school was more traditional and referred to the teacher with sensei after the name. We also started class in seiza and bowing in that position. In my Kenpo class we stand and do the fist and palm, and bow to the front. Very different indeed! Of course, this is Kenpo vs Aikido and the differences are astounding.