<$chaptertitlename> gives unexpected results

The <$chaptertitlename> building block wasn't really designed for what you're trying to use it for. It's for hierarchical books where you're using folders and templates.

From the Help:

Associate a template with a folder

Associate a template with a folder to publish a cover page for the files in the folder. Any template associated with a folder is published like any other file in a book. Use the <$chaptertitlename> variable to include the folder name in the template associated with the folder. You can use this variable for a folder occurring at any level in a book.

See also:

http://blogs.adobe.com/techcomm/2009/09/fm9_hierarchical_books_new_variable.html

http://blogs.adobe.com/techcomm/2009/06/numbering_in_hierarchical_books.html

As Error suggests, use a running header/footer variable to reference the paragraph text of the chapter title tag.

See: Chapter Title Name variable in FM10

I'd go with Running H/F 1 or 2 myself, depending on how you implement chapter titles in body text.