Hi Crispin,
The problem is with too many settings to do the same thing; something mojoPortal is kind of plagued with because of the goal to remain backwards compatible at all costs. Anyway ...
Check your theme.skin file. You likely have UseModuleHeading set to false on the ModuleTitleControl. This ignores the element set on the module, regardless of any other settings.
I've been working on an update to replace how all of this is handled to make it easier for skin developers to 1) allow/disallow changing the element and 2) limit which elements can be used.
We've also been slowly removing settings from web.config that have anything to do with skins because those settings belong in the skin.
Thanks,
Joe