This means first of all that the player should be known in the community, either because of a significant number of completed mafia games (at least 5, probably more. Perhaps something like having played mafia games with 50 unique individuals?), or because of exceptional activity over a large period of time (thinking at least a year) in one of the other sections of mafiascum (mishmash, mafia discussion, general discussion, scumchat).
Furthermore, the title should be something the player is recognized by. A title can be based on something that happened once or twice, but that will be remembered for years to come. If that is the case, it should be able to be linked to, so that new players can see what the title is about. This means that a title based on something that happened in scumchat can only be considered if the log is posted. The other possibility is that a title is based on something that is defining of a person. In that case, it should be behavior or events that happened repeatedly, and are likely to happen again. It doesn't really matter if it's based on something in mafia games, mishmash, mafia discussion, general discussion or scumchat, as long as the player is recognized (see first point) through the area of the site the title is based on.
Thirdly, it is a plus if a title is actually witty. However, this is not necessary, and may definately not reduce the recognizability of a title.
I can think of three reasons to change/remove a title. The first is that the player no longer wants it. A player should be able to decide that a title is not something he wants to be remembered by. The second is that the title is no longer defining of the player. The third is that a clearly better title comes along.
As for the proces of giving out titles, I think the current method works reasonably fine. A single thread where users can suggest titles, with a title fairy who judges if titles are actually suitable and keeps order in the thread.
The title thread should only contain serious suggestions for titles and discussion of those suggestions. It is no place for spam, nor is there a point in continually suggesting titles based on something which simply isn't worthy of recognition. There shouldn't be a limit to the amount of titles suggested. However, if you post in the thread, I expect you to actually take the titles seriously.
I believe site ideas is as good a place as any. It doesn't belong in mafia discussion, because titles can be based on something that happened outside mafia games too. Nor is it suitable in general discussion, because too many titles are based on mafia. Site ideas is a place to suggest improvements to the site, which means it does fit here, although tediously.