Yes it was all part of American marketing. "Castlevania" mixed "castle" and "Transylvania", which referenced horror films and comics of old; which is exactly what the first CV excelled at especially compared to other series.
Also mixing "Castle," because the castle is the main focal point, and "Transylvania," because that town is heavily related to Count Dracula and the setting for scary stories in general.
There really isn't much more to it I think. Konami of America was the one to decide on "Castlevania", and it's stuck since, because it sounds damn cool and unique.
Where the sotry's concerened, I like the idea that the name is given by the nervous onlookers from the village. It fits.