The TitleBlacklist extension adds a check box to the account creation page for privileged users to 'Ignore the blacklist'.

There needs to be a similar option exposed in the api to create accounts ignoring the blacklist.

OIT uses a script for new account creation for new staff that has been broken since TitleBlacklist was enabled, requiring manual account creations.
https://github.com/WikimediaOIT/mediawiki-accountrobot

Reedy suggest this will probably be a simple fix very similar in structure to this:
https://github.com/wikimedia/mediawiki-extensions-AntiSpoof/blob/aac11a63e3ec7e0f438f483cb0286370550a4ff7/AntiSpoofHooks.php#L145-L181

Cheers,

Joel Krauska