Is it okay to fictionalise real people for your book?

My latest novel has lead to an interesting quandary for me. I have made a fantasy world that is based on our world’s history. In this Steampunk world I decided that the royal family should remain the same as a point of contact between our world and the story.
Now comes the problem, while one of my Alpha readers really liked the story/Chapter that dealt with the Crown and what was happening to her, another was actually put off the story because it fictionalised real people, and thinks I should cut the story to remove as many of the references to ancillary royals as possible, especially the Duke of Cornwall (in Ironmaster’s universe there is no Prince of Wales) who has taken over defence of the Marches.

I think that heads of state are almost naturally involved in fiction, although in America you can just get away with “Mr President”, it is normal in the UK to include a fictionalised Royal family, where the Monarch is named and many family members are also included, but what do you think?

Should I change the names of the Royal family in my alternate universe because some readers find the idea of a militarily active Prince Charles uncomfortable? Or is this par for the course in alternate history fiction as I believe? I guess I’m also asking (although not really expecting an answer): Does it bother famous people to be fictionalised like this, or not?

If anyone wants to read the chapter in question drop me a message and I’ll sort it out for you to have read access on google drive where the 1st draft is ‘resting’.