There are lots of reasons why someone who is qualified to be a principal engineer might have worked for a long time without being promoted. Many companies do not recognize or reward based on technical merit. For example, you might need to be buddies with the right manager or luck into the right high-visibility project. Many people also job hop for the sole purpose of being promoted to a higher level because their existing company won't promote. I've worked at several companies where the inside joke was "It's easier to get hired at Google than to get a promotion here."

I think a lot of hiring companies over-index on "what's the candidate's current job title/function" as an indication of potential.