We don't know if this is a bug or a surprise gift from Blizzard, but it's probably a safe bet that it's a bug they'll be squishing. It seems cruel to the hopefuls who may think they have a title, only to lose it if this gets corrected. But, we'll see what Blizzard does. At least Season 4 has started, and everyone will have the opportunity to try again.
Edit: While we realize that, per posting from Eyonix, new titles wouldn't be granted until next week, it had previously seemed that the title stripping would still happen at the end of Season 3.