So, everyone here would name their child after a personal, special name that their grandmother's husband used at private moments?
I don't think so. If you want to honour, you go formal.
If you want to show you're special and in with the royal family, you go familiar.
In my family, it wouldn't matter, nobody knows us. But my mum would not have been as pleased to be honoured in a naming ceremony, if a short pet or nick name were being used. She would have preferred that her proper full name be remembered, especially if the pet name were adorable but with childlike connotations.. Older people like to be treated by younger people with a bit of decorum and deference, I believe. It's a form of protecting them to do this. I don't think invoking them in litigation is really protecting them, and it's hard to see that what courtiers said to a media channel won't be central to any law suit.
In the royal family, you follow tradition. The royals call the Queen, " Her Majesty the Queen" , when speaking to the media about her.
Harry would be fairly formal in the way he addresses her in person. He would not have associated her with this pet name. . We are told the royal family curtsey and bow to one another when in their own company. They follow special traditional forms and conventions.
If a person thinks the royal family is just a well-known family living in Britain, then their take might be different. But I think of the constitutional and highly significant role of the RF in public, and I decide in my mind that their position is different to that of the run of the mill family and conventions matter to them.