This is actually a really creative ore. It plays around with iron to make a rather stronger version of the Iron. While I'm against of creating a brand new tier complete with armour and tools, this has some potential. I would suggest making Titanium as rare as Gold so it's balanced between how much you can obtain it.
"due to it's extreme durability titanium ore can only be smelted in a furnace using lava."
500 uses is barely twice the durability of iron (251) - and a third of that of diamond (1562); even with Unbreaking III (x4 uses) is is only 1/3 more durable than unenchanted diamond, and you can smelt diamond ore using any fuel, that alone puts me off from wanting to use it, even if there weren't already a better material than iron, plus you need two ingots to make one "iron alloy" and it is presumably rarer than iron.
Overall, this is just a "cheaper" substitute for diamond (same damage/armor stats, slightly slower mining speed), which is easier to obtain, especially when branch-mining with Fortune (effectively about 1/3 as common as iron, twice as common when considering using the respective pickaxe to mine more; more durability also means it is cheaper to repair/replace over the long run especially after 1.8 removed durability as a factor in repair costs).