Because "Princess Royal" is technically a style, not a title, I hope Charlotte receives a dukedom if Louis does. Just as I hope her children are given the style "Prince/Princess" if his children are.
But as you suggest it would be easier to eliminate titles completely and restrict the princely style to the heir's children.
I don't know if we'll ever see a grandchild of a monarch given the style of Prince/Princess unless they are the children of the heir. And yes, I'm aware that wasn't your point.