I propose that the number of rainbows you are wearing should be part of your title. To make it reasonable only rainbows are within 15 levels of your current level should count.

I propose that the easiest way to do this is simply add a 5th word to the front since its already obscenely long.

I recommend
Oridinairy -- No rainbows
Plebian -- 1 Rainbow
Honorable -- 2 Rainbows
Fastidious -- 3 Rainbows
Formidable-- 4 Rainbows
Redoubtable-- 5 rainbows
Renowned -- 6 rainbows
Illustrious -- 7 rainbows
Mythical -- 8 Rainbows

I would be Qutse, the Redoutable Acrobatic Keen Poison Ranger

Interesting but not sure I want everyone knowing how many rainbows I am wearing at a given time. Also need your max to be 10, given available slots.

I think I would just toss out the "level title" and replace it with "gear/mystic title".

Primary reason is level title is redundant with level. Mystic title is redundant with nothing other people can see.

The theme for every title but the level title is that it presents information not otherwise viewable to others. Reframing it in terms of a gear measure is consistant with that theme.

I pretty much never get rainbows, so I'd look like a total loser.

I don't particularly like this idea either. Your character title reflects the natural abilities and skills of your character. Wearing a colourful item has nothing to do with you innate abilities. Besides, the title is long enough, and is descriptive enough in my opinion. For another matter, the words in your titles ATM are non-linear, if you get my meaning, there is no definite "this word must be superior to this one" and so on (apart from the second word describing your skill, but even that one branches into different realms for different classes). The system you are suggesting, however, is completely linear and hierarchal.

a lvl 100 mage would be in all yellows and purples

this is one of the worst ideas ever period.