I would like to suggest that the "default titles given to forum members" should always be shown so that other members can have a better understanding of the experience of any given member. I also feel that would be more consistent. However, I like the idea of the custom user title system that is set up for the forums, so that should remain. Instead of the custom user title replacing the default title, though, I think the custom title should be placed underneath the default title so both can be seen, again for consistency and easier understanding.
I would suggest using a system similar to military titles. Doing a quick search on Wikipedia (see here:
Military rank - Wikipedia, the free encyclopedia), I found a list of common military ranks and have listed seven in order I feel might be appropriate:
Ensign > Admiral > Brigadier > Captain > Colonel > Commander > Lieutenant
I like the idea of seven (7) different titles due to various reasons I'm not sure I can explain. It's just the significance of the number seven (7) that I'm sure most would agree with me. But to describe a way to integrate this hierarchy into the forums, I would also include a title for new users: Rookie. This title would be similar to someone being called a recruit in the military. My suggestion for system with the titles would be the following (smilies included for relevance and amusement):
Rookie: new members with 0-999 posts
Ensign: 1000-1999 posts
Admiral: 2000-2999 posts
Brigadier: 3000-3999 posts
Captain: 4000-4999 posts
Colonel: 5000-5999 posts
Commander: 6000-6999 posts
Lieutenant: 7000+ posts
I'm not sure about the number of posts, but I figure increments of 1000 should be suitable. This is simply my recommendation.