I think I am fairly well informed of the history of the respective ranks and the service rank structures.Those distinctions are important, because they show respect. It's not an army rank structure at all. Some of it is due to "jointness" being forced on them. Others are a very old tradition.
Colonel comes from a leader of a column.
Lieutenant is "in lieu of", as has been noted.
Other examples will occur to you.
Others have mentioned the differences between pay-grades and ranks. Again, Jointness forced.
Oh, and you will note those are Officer ranks. The Army has no Lance Corporal, Gunnery Sergeant, Master Gunnery Sergeant, etc. But my experience has always been others had the respect to learn Army equivalents, but that respect was rarely reciprocated.
True story: In Afghanistan, an Army Colonel was giving a lecture re: respecting Afghan culture, and that not everyone has the same background and decisions.
Same Colonel, later the same day, addressed a Navy Lieutenant Commander as "Major". When the LCDR said "sir, I'm in the Navy, I'm not a Major, the response was: "I don't have the time or inclination to worry about such things.
So the guy who was lecturing about respecting other cultures couldn't even allow for another American making a different decision.
It's all about showing respect.
I frankly find your Colonel story hard to believe. Witness that yourself? I know of no soldier who would ever deliberately misuse the rank of an officer or enlisted man - particularly if he reached the rank of colonel. Though it does make a good - how does the Navy put it - sea story.
However, abbreviations of the identical proper rank are another issue; one I frankly don't care to get worked up over.