in Germany we have this stupid differentiation with "Sie" and "Frau X", or we can say "Du" and "Eva", and the horrid thing is you never know which one is appropriate. There are lots of people insisting on the formal addressing, feeling that it's a lack of respect or imposing inappropriate intimacy if you use the informal one, and others who feel exactly the opposite. I still couldn't get used to "Sie" after being a German for 44 years, and if someone calls me "Frau Röben" I probably wouldn't answer because I wouldn't think he meant me - I'm Eva. But then when I'm in Germany I always try to address people in the way I assume they would like to hear being addressed. Why offend people with such a simple thing? So if I ever would meet the queen of England I'd probably say whatever she expects (no need for such a meeting), and if I meet my sensei I say his first name because that's how he likes to hear it. I'd rather use "sensei" for talking ABOUT a teacher, not to him - expect that's how the custom is in his dojo.
But when I'm teaching classes at the university, I'd never expect my students to address me formally, and this has nothing to do with laxness, I still expect them to work and to make some efforts to pass their exams. If ever I'd get to the level to teach aikido, it would be the same.
All the best,