This post was inspired by Charles James' article,Titles and Respect . The following is based on my experiences in this matter of tradition and etiquette.
I called my first karate instructor by his first name, as did everyone else. Later, when I began traditional studies elsewhere, the Japanese title of sensei was conveyed. Sensei is an honorific term designated for instructors who hold the rank of at least sandan (3rd degree black belt), and this is the way it should be. Junior instructors should not be referred to as sensei, even if the top brass isn't around. But the lower ranked yudansha (black belt holders) have achieved something special, so they deserve some recognition. When addressed, Mister or Miss or simply "sir" gets the job done. I don't like the title of sensei to be thrown around.
One school I trained at had the annoying policy of calling anyone with a black belt sensei. I really hated that. As a young shodan (1st black belt) I had no inclination to teach and as such I didn't feel I should be afforded the title. Furthermore I felt this practice took away from the legit instructors that actually earned and deserved this distinction. But it gets worse. If said yudansha walked into the dojo during the course of a class, it was understood that everyone had to stop what they were doing - regardless of whatever that was - and perform a "courtesy bow" to the exhalted black belt "sensei." I kid you not. The first time this happened to me I actually turned around to see if some big shot was walking in behind me. Naturally I failed to bow back to the class, much to the chagrin of the chief instructor, but I respectfully protested. "Sir, why do you call all the black belts 'sensei'? I'm really not comfortable with that. 'Mr. Vesia' would be fine."
"No, no... we call the brown belts 'Mister.' It's all to show respect, Sensei John."
It didn't stop there. At the end of class we would all line up to bow to a portrait of Shimabuku (our founder) hanging on the wall. Then the most senior student present bows to the instructor. The whole class bows. All fine and good. This is the stock ritual most Isshinryu dojo are accustomed to. But this place took it further. Now the sempai (seniors) were then required to bow to the juniors uttering "skit skit kohai ni rei". And of course the newbies had to return the favor ("skit skit sempai ni rei"). I must've bowed 10,000 times during my brief stay at this school.
To top it all off, the chief instructor of said school who had been campaigning for a long awaited promotion to 5th dan ended up driving away almost all of his students when he began to exhibit bizarre behavior, culminating in a divorce, the closing of his school and other personal disasters I'd rather not go into. Becoming a shihan was the beginning of the end for this guy, who became so identified with his persona as a martial arts master that it drove him crazy. We sempai, kohai, sensei and even various renshi could only helplessly watch this onetime decent karate instructor completely lose it, both psychologically and professionally.
I think respect and titles are an important and even necessary feature in traditional martial arts. But when they become the pursuit of self-aggrandizement or to bolster the status of certain students it can only lead to trouble.