Gotta say that this is such a huge and refreshing change from the usual shyness we see in relationships in manga. What do those elves put in the barbecue, anyway?
As for the Duke: I can see him racking his brain trying to come up with a legitimate path for his daughter to marry Allen. He's not one to stand on tradition, as much as he has to give it a nod for the sake of diplomacy. The upcoming wars will be a good opportunity for Allen to gain a title in his own right. How convenient!