I remember when EU writers would refer to the droids phonetically See-Threepio and Artoo-Deetoo. So even here the emphasis is on letter sounds and not the letters themselves.
I agree that this line breaks immersion even when there are other examples of individual letters being spoken in Star Wars, and think that it’s not so much the substance of the line but the tone. In Star Wars, even the most absurd names are spoken with sincerity as a way of investing the audience in the reality of the world. When a character refuses to take even their opponent’s name seriously, how can the audience take it seriously? It’s very much like Star Lord challenging Ronan the Accuser to a dance-off, except that The Last Jedi isn’t supposed to be a comedy.
Short answer, I get it.
I don’t understand why so many seem bent on not getting your point.