Wedding Journey -- Chapter 1

[Evie]

I thought that the proper form of address was the person's highest title. Alaric and Dhugal are both knights, earls, and dukes, but they go by Duke Alaric or Duke Dhugal.

Correct.     And either would go by "Your Grace," if recognized by the speaker as one of Gwynedd's dukes.  Though if some hapless commoner were to see one of them without knowing who he was, and surmised by the quality and cut of his clothing that he was a nobleman, but the duke didn't happen to be wearing regalia that was a dead giveaway of his rank (like a ducal coronet), the commoner could get away with "my lord" without giving offense.  It happens to be a correct title and therefore acceptable under that sort of circumstance, just not the most proper form of address for that individual, if that makes sense.  Which would also be why Nigel would be more of a stickler for proper protocol with the pages in training.  They're expected to learn proper Court etiquette, including proper forms of address for the peers of the realm.  Joe the Chandler's Son would probably be held to different standards.   

OTOH, Sir or Lord High Muckety-Muck who knows either Alaric or Dhugal on sight and sees them at Rhemuth Castle on a fairly regular basis had better address both as "Your Grace" in public, and probably in private as well unless he's close enough friends with them to be invited to address them more informally.