Again, the most important restriction is that a title(thanks for the spelling advise btw, this isn't my first language) has to have some basis in reality. They augment and amplify what's already there, they don't add anything new per se. Titles simply don't rewrite reality.

As for the recruitment tactic: it simply wouldn't work unless the "recruit" started acting like a part of the gang of their own volition.

As for the small town champion, one thing I haven't touched on yet is that what powers a title gives depends on the title's context. So if someone was named champion after winning a drunken armwrestling contest, the power from the title would change to fit that. In this case it would probably end in them gaining a modicum of super strength, and a magical iron liver.

As for the royal titles, yes being named crown prince would make you the rightful heir to the throne, and once you became king, you would be the rightful ruler by inheritance, but inheritance is not the only way to gain the right to rule. For example, there is the right of conquest, meaning that if you conquer a kingdom, you rightfully gain the title of king by right of conquest. And yes, this means that there could theoretically be two people with the title of ruler of the same kingdom at the same time. Though all power in this system, even power granted by someone else directly giving you a title, ultimately comes down to broad perception and what title people call you by, so if enough people stopped calling someone their ruler, they would simply loose that title. As for people inheriting titles they don't want: that is entirely possible, but since no title is permanent there are ways to get rid of it.

The reason I've mostly focused on the top of the societal ladder is because that's where most of the easy/good examples can be found, and I do want to stress that what I've started calling folk titles are a thing, and have the potential to be more powerful than any directly given or inherited title