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The word 'kaiser' is derived from the name of Julius Caesar, who was never emperor. He was, however, Rome's dictator, which is basically a king, therefore 'kaiser' is acceptable. QED.
What exactly happened there as at one point to get around it and to have some sway as an elector he dubbed himself King in Prussia rather than of Prussia. Did Prussia step out of the HRE and/or abandon its participation as an elector prior to 1806?
The pretense was now redundant.