It is in keeping with well-established international usage to continue to refer to him as a deposed monarchs as HM King Michael - as opposed to "HM the King of Romania" which would imply he were actually reigning. Of course, if does not recognize any Romanian regime since the Communist coup which deposed him in 1947, one would still refer to him as the befits the de jure monarch of his country. I know of no state or international body which does so.
Even if one were to accept that Michael is de jure king, it is by virtue of the 1923 constitution, which does not give him the authority to alter unilaterally the succession.
As for calling his wife Queen Anne and his daughters princesses, that really is of somewhat dubious validity, but is generally done as a courtesy. President Ilescu at the time of Anne's 1996 visit said that as Romania was a republic, it "has no queen. I know no Queen Anne." He later softened his view, though, when he decided King Michael could help with lobbying for NATO membership. I am not aware of whether the lady has ever officially been called Queen Anne" by an official of the Romanian state, but would be very interested to know if anyone can cite an instance.
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