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I rarely see people lording their titles over other users. When I do see that happening...let's just say they lose those titles very quickly.
We have quite a few problems on this website, and I believe the titles help to eliminate more problems than they cause. Someone who has a "Heroic" or "Legendary" may be less likely to reply to spam or flame, because aside from a blacklist, they know they run a risk of losing that title. The old way did not provide us with that extra incentive to behave, so many of us did not. I think more of us are behaving now, so I believe the titles are a smashing success. All in all, I think that after weighing the pros and cons of the member titles, the pros outweigh the cons, so I think they were an excellent addition.
Though I understand your egalitarian notion OP, when we were mostly egalitarian, it was not working as well as it works now. After looking at both systems, the incentive to behave now, which we did not have before seems to have fixed some of our issues without making too many other issues. There was no long term incentive for behaving before, and quite a few people noticed. Now that there are long term incentives, people are more likely to at least read and follow the rules. I think we can tolerate a minimal amount of "elitism" as long as people are behaving, especially since we can easily see "elitism" when it happens, and deal with it.
Incidentally, there is and always has been "elitism" on this site anyway, so I don't think anything has really changed there. Same ol' same ol' with a few benefits. The benefits far outweigh the problems, so I'd rather we kept those titles. In fact, I'm hoping for more incentives at the margin for good behavior soon.