Honorary Kentucky Colonels
An Honorable Civilian Title, Not Only a Military Rank
When exactly "colonel" became an honorary title remains mostly unknown, as it appears it is not a title that was used without an extra officio commission until after the 1770s by the Ohio Company, the Transylvania Company, the Watauga Association, Scioto Company, Nashville Settlement and other frontier settlement companies. We do know from its colonial origins that it was a title based on a person being from the landed gentry and was granted based on an individual's ability to head up a commission, establish a company, found a settlement or command a militia. Colonels were most appropriately the highest executive officials of their time, not much happened without the consent of a colonel.
Apparently in Kentucky the honorable title of colonel took on a life of its own starting cometime after 1775, when colonels became masters of their own domains as major landholders, which constantly evolved until the end of the 19th century. The honorable title was eventually adopted by the Commonwealth of Kentucky as a notable award in 1895 by Governor William O'Connell Bradley, who had been called a colonel for most of his natural life since the Civil War despite never seeing any action or becoming a soldier. There is no evidence that Kentucky Colonelcy was started by Governor Isaac Shelby or that Col. Charles S. Todd was the first, or a Kentucky Colonel at all.
Civil and Honorable Title
One of the most important transactions of the Transylvania Company at the time was voting "that a present of 2,000 acres of land be made to Colonel Daniel Boone, with the thanks of the Proprietors for the signal service he had rendered to the company." This statement gains additional force from the indication given that the "Kentucky Colonel" began to flourish in colonial days and is not, as popularly supposed, a product of latter day wars and the propensity of a peaceful people to distinguish certain of their number with a title which, in many instances, means that its recipient never saw a regiment in line nor heard a hostile gun.
In the Durrett manuscript history is a complete copy of this memorial. "Having their hearts warmed with the same noble spirit that animates the colonies and moved with indignation at the late ministerial and parliamentary usurpations, it is the earnest wish of the Proprietors of Transylvania to be considered by the colonies as brothers, engaged in the same great cause of liberty and mankind."
– Johnson, E. Polk, A History of Kentucky and Kentuckians, 1912, Lewis Publishing Company
In the historical record we have found many cases of brigadier generals, major generals, lieutenant colonels, majors, captains, lieutenants, surgeons, commodores, coronets and even privates from the Revolutionary War being called "colonels" upon receiving a land grant (warrant deed) for 1,000-15,000 acres or more and being seniors on a pension. Making the title "Colonel" one that was used as a complimentary courtesy to confer respect in Kentucky in its earliest years, while it was still a county of the Commonwealth of Virginia.
In Kentucky, eleven generals, thirty-eight colonels, forty-eight lieutenant-colonels and approximately 2,500 other commissioned, non-commissioned officers and privates from the Continental Army and the Virginia Navy received land grants between 1783 and 1820. Lands were granted under the Revolutionary War Bounty Warrants Act of 1779 by Virginia to Old Dominion lands until 1876. Bounty Warrants were only issued to a soldier or sailor that served at least three (3) years continuously in the State or Continental Line or State Navy. Militia service did not count.
Prior to 1783 (1776-1782) smaller land grant warrants were issued to officers and first settlers based on their acts, claims and deeds in any Virginia County or militia. See Warrant Deeds
Col. Charles S. Todd
We investigated extensively the popular account of Col. Charles S. Todd being the first "Kentucky Colonel" and becoming an "aide-de-camp" with the rank of "colonel" under Gov. Isaac Shelby in 1813 or 1815, however we could not find anything about this in any of the texts about Kentucky that were written before 1940s, not even from Col. Todd's own personal memoir. 
We could confirm that Col. Todd had become a colonel in 1815 when he was made an inspector-general by General McArthur in the Michigan District and served as an aide-de-camp in the War of 1812 to General Harrison. We also confirmed that he married Isaac Shelby's youngest daughter in 1816, but could not confirm that he was honorably made a colonel by Governor Isaac Shelby or anyone else in Kentucky. Why the story was fashioned and how it came to be known as the state's history we have no idea?
Griffin, Gilderoy Wells, 1840-1891, Memoir of Col. Chas. S. Todd, 1873, Philadelphia
Illinois Campaign Colonels
Outside of the Thirteen Colonies (United States) the highest military official allowed to issue commissions was General Col. George Rogers Clark, Father of Louisville and Founder of the Commonwealth of Kentucky. General Clark was an American surveyor, soldier, and militia officer from Virginia who became the highest-ranking American patriot military officer on the northwestern frontier during the American Revolutionary War. He served as leader of the militia in Kentucky throughout much of the war. He served the United States from 1776-1790, he received several warrants to claim lands in Kentucky and his greatest claim was Clark's Grant in 1781 for 150,000 acres in Indiana. General Clark kept 8,000 acres and gave the remainder to his soldiers.