:::Even during the 1891 census, castes like Vilakkithalavan and Veluthedan were counted separately. 90% of the Nairs counted in 1891 belonged to the Kshatriya divisions. The remaining 10% were caste groups wrongly claiming the Nair status. Moreover, the 1891 census in Kerala was conducted by Iyer Brahmins, who had a deep seated resentment towards Nairs (Iyers were treated much below Illathu Nair and Swaroopathil Nair in Travancore caste system and they were not allowed to perform priestly functions). Since all the original castes composing the Nair supergroup were Kshatriya and none of the historians considered the primary occupation of Nairs anything other than being soldiers, there is no reason to change the introductory phrase. As pointed out in the reference, the Nairs were commonly referred as Kshatriyas (whether it is accurate or not is another question) by historians. KN Panikker, probably the most famous historian from Kerala, calls them "a Dravidian variety of the Aryan Kshatriyas". Chintaman Vinayak Vaidya calls them "Nagara Kshatriyas" in his book  Downfall of Hindu India. The question is not whether the much researched Nagvanshi origin is accurate or not. It is whether Nairs were known as Kshatriya during the last millenium. And the answer is yes, from multiple sources. 

However the caste system is the most complex in India, and this is the reason why Swami Vivekananda called Kerala a mental assylum. In Kerala, the son of a King can never be a Kshatriya, as according to Nambuthiri beliefs, a Kshatriya should have a Brahmin father and Kshatriya mother. This is the reason why the so called four "Suryavanshi" dynasties of Kerala always married off their females to Nambuthiris. These clans were known as Samanta Kshatriya and were regarded as equivalent to Kshatriya by the Nambuthiris. It should be noted that the Nambuthiris considered every other caste as Sudra, even the other Brahmin communities. The pollution time period (pula) gives an indication to this. Nambuthiris observed 10 days of pula (6 days in some places). The caste which is immediate next to them, the Samanta Kshatriyas observed 11 days of pula. Top most ranked Ambalavasi Brahmin communities like Elayathu and Moosad (unlike other Ambalavasi Brahmins like Maarar, these two castes were recognized by the Nambuthiris as a part of Brahmin community) observed 12 days of pula. This means that the position of Samanta Kshatriya was intermediate between Nambuthiri Brahmin and Ambalavasi Brahmin. The next higher ranking ones were some insignificant divisions of local Brahmins like Pushpaka Brahmins, who observed a pula ranging from 13 to 15 days. Higher ranking Chandravanshi and Nagvanshi Nair groups (all of the Samantans, most of the Kiryathils and most of Illathils) observed a pula of 15 days. Lower ranking Nairs (like Swaroopathil and Charna Nair) observed a pula of 16 days, so did Iyers and lower ranking Ambalavasis like Maarars in Trivandrum (In Palghat Iyers never observed any pula traditions and were independent on their own). 

Regarding the claim that people were granted the Nair title, I don't think a sufficiently large number of people belonging to other castes were granted the Nair title. A few occurrences are there in Travancore, where during the 18th century a very small number of Iyers were granted the Illath Nair status. During the 18th and 19th century a small number of Vellala and Maravar people were granted Nair status. Other than that there has been absolutely no "conversion of caste". The Portuguese record an incident, during 16th century when a Portuguese captain asked the Cochin King to elevate the status of some lower castes to Nair, the King told him that even the highest ranking Emperor does not have that power. During the end of 19th century, however as the Nair dominance was on a steep decline, a number of servant castes asked the Iyer census takers to count them as Nair, which they happily obeyed. And for a brief period, some of them even added "Nair" or "Pillai" to their surname, until the Kerala government nullified affirmative action benefits to all those who are having such a surname. These groups came not only from the Sudra division, but also from other divisions. These groups included Brahmins like Maarars, GSBs and Pisharodys (In Travancore, where Ambalavasis are having a lower status), Vaishyas like Chettys (in Travancore) and Arya Vaishyas (in Malabar) and even other Kshatriya communities like Marathas and Bunts.