Nope, during our negotiations, it was made a Marquessate. It is a level 7 province with the attributes of being a "Trade Center" and a "Kingdom Capital"; it seemed fitting to make it a marquessate.
Additionally, I couldn't elevate Isilviere to a Baron (all sorts of reasons for that), but I could make him a Marquis in Osoerde and therefore he is only a ceremonial step below the Barons/Baronesses.