Didn't Riker specifically call him "lieutenant" in one episode?
Not all that specifically, which is a blessing from the continuity point of view...
In "Where Silence Has Lease", Riker and Lieutenant Worf are about to beam over to the fake starship Yamato
. Riker and the Lieutenant have a discussion about where exactly to beam to, for best tactical advantage, and this culminates in Riker saying "Aft station, Lieutenant". Whether he is addressing Worf or the person behind the transporter console (that is, O'Brien), we can choose to interpret to our advantage.
O'Brien is in an authority position, and those under his command -- whether enlisted men or junior officers -- have to listen to him.
...The odd thing about that is why Starfleet would choose to place any commissioned officers under his command. There are two or three occasions where O'Brien gives orders to a yellowshirted Ensign. What is the role of this Ensign? If he or she has engineering training plus
the sort of rudimentary command training commonly associated with officer commission, shouldn't that put him or her ahead of O'Brien in the bossing game? Shouldn't this Ensign take care of the commanding, freeing the more experienced O'Brien to do more of the engineering?
We could say that some of the yellowshirts are actually from Lieutenant Primmin's (later Eddington's) security force, and all of O'Brien's underlings have been logically organized out of people of lower rating than O'Brien's own. But that just raises extra questions. Why are there so many commissioned officers in the security force when it's the engineering team that would have more demand for "higher education"?
We could also write off the Bajoran commissioned officers in the engineering force as something the local government has burdened on the Starfleet organization, something O'Brien and Sisko don't really have to worry about in the chain-of-command sense (because these people are outside their direct control to some degree anyway).
In the end, we're left wondering why O'Brien wasn't "mustanged" into a commission when the station's importance and the number of Starfleet officers aboard started ballooning - or replaced outright by somebody with greater command credentials (say, let's import Lieutenant Sonya Gomez to the show!). This is more difficult to justify than the decision not to replace Sisko with a flag officer, as O'Brien isn't a local religious figure (he's just a Storyteller, and something of a charlatan at that).