As a note, I've had it mentioned to me in the past that I tend to over-emphasize European cultural and historical models, and not address ideas from other cultures. I agree this is a failing on my part, and my only excuse is that given the volume and depth of human history I had to specialize in some way. So delving into the culture and history of my own ancestors is where I've started. When someone refers me to good sources of info from other cultures, I do go through it, but European history is my comfort zone and my first fallback when doing this kind of speculation.

Okay, now we have pretty much destroyed anything resembling a hierarchy of titles, let's go deeper into how this relates to the Crystal Empire and break what little remains. For this, let's use the odd situation that occurred once in history where Princes officially outranked an Emperor.

Once upon a time, there was the Holy Roman Empire. Not the original Roman Empire (27 BC - 476 AD), or the Eastern Roman Empire (285 AD - 1453 AD, also called the Byzantine Empire), but a later version (926 AD - 1806 AD) that contained the areas now covered by modern-day German, Italy, the Czech Republic, and parts of France.

The Holy Roman Empire was ruled by an Emperor, but to be Emperor you had to first be elected King of the Romans by a council of dukes, kings, margraves, archbishops, etc. who were collectively known as the Council of Princes. Once elected as King of the Romans (not just 'King', because there were several Kings in the Holy Roman Empire, but very specifically 'King of the Romans'), to get the final title of Emperor the Pope had to confirm the new title. Later that last detail was abandoned, and the rulers of the Holy Roman Empire were just Emperor-Elects, and eventually even the term 'Emperor' was lost with the rulers simply titled 'King'.

However, despite being Emperor whoever managed to jump through all those hoops did not have complete control like you would expect with that title. The Emperor could be overruled at any time by the Council of Princes, simply by threatening to replace him as King of the Romans with another from their number. This is very similar to many modern governmental systems where the Prime Minister (or President) can be removed from power via a vote of non-confidence. The precise mechanism varies, but the idea is the same.

Getting back to the Crystal Empire, the reaction of the crystal ponies to Cadence was interesting. Nobody paid much attention until she got ahold of the symbol of sovereignty, the Crystal Heart, and then suddenly they're all 'Crystal Princess' for her. Being an alicorn, supporting a barrier against Sombra, and even having the Crystal Heart as her cutie-mark, meant nothing. But once she got that artifact, it felt a lot like the King of the Romans getting the Pope's permission to be the Emperor.

So here’s how it could have gone, using what I've discussed so far and pulling in what little we know about Equstrian history:

Once, long, long ago, the Crystal Empire was composed of many subject kingdoms, dukedoms, etc. Including a much smaller Kingdom of Equestria than what exists at the moment. This small Kingdom occupying the area now covered by the Everfree Forest. Other sections of the Empire were the original countries that the various tribes came from before founding Equestria, plus several others, and the most northern region which contained the capital of the Crystal Empire itself.

Then there was a minor incident with an alicorn princess and a supposed love potion.

A dragon came, a kingdom fell, and Chaos reigned. (http://cupidite.tumblr.com/post/40034251127/neverending-story. I’m not saying I believe this specific event is connected to Queen Chrysalis, but I like the imagery in this tumbr post, so I'm borrowing it for illustrative purposes. All credit for the image goes to Cupidite, of course.)

Meaning that Discord took the opportunity presented, and turned everything upside down... perhaps literally... In time Celestia and Luna, likely being somewhere around the age Twilight is now, went on a quest to assemble the Elements of Harmony (as detailed in my previous blog topic), and stoned Discord as soon as they could. The pair took over the Kingdom of Equestria, probably as the region they themselves originated, leaving the rest of the Crystal Empire in disarray. They were still relatively young and were yet to develop the political acumen necessary to stabilize the entire empire. It is entirely possible that they were briefly titled Queens of Equestria, but in an effort to recall the 'golden age' prior to Discord, those titles were superseded by the 'Princess' title from the Council of Princes that would normally have determined the next ruler of the Crystal Empire.

If that council was still working in any way, or even existed in anything other than the Princesses' own hopeful imaginings.

While the Crystal Empire did not technically exist anymore, as it was broken up into multiple smaller independent kingdoms, dukedoms, etc. there was still a northern region with the original capitol, and home to the Crystal Pony tribe. After Discord's fall, this was obviously taken over by the Warlord Sombra, who without a functional council of Princes declared himself King of Crystal, and claimed the Imperial Throne. Due to the lack of organization, nobody either supported or disputed this for quite some time.