Personally, i'd like to see it set so you have your name, but then you have your alias that you actually go by. Your actual character name would only be displayed to people on your friend's list, and is needed for them to add you, while what you want to be called and openly known as is what's floating over your head and what not.
They could even make it so that if you reach a certain rep you can't changed your alias, or even that your alias changes based on where you are and your alias when you built rep with the faction/town/ect you're around.
So, if my name was "John Doe" perhaps i'd start off in the newbie area as "John". After a while i level up my rep in the newbie town, and move on. Later, at level 748 i deside to come back to the newbie area. At this point, my nickname is "John The Bloody Bunny of Doom", but back in that newbie area, they only know me as just "John".
There could even be quests/achievements associated with titles which may be available as well. However, like i mentioned above, if you reach a certain rep in the wasteland, you shouldn't be able to change your nick name (William Shatner is always going to be Cpt. Kirk, for example). "When this epoch began to wind down, the remnants of life once more ventured forth to commence the struggle for survival and dominance. This is the story of some of them" -Damnation Alley