The phrase 'IT' is so overused, I'm not sure what it means any more.
It means the same as it ever did, Information Technology, it is intentionally a broad term for an industry. Like "Finance", "Retail", "Automotive", "Medical", etc.
OK, maybe it's an ego thing, but I spent a lot of years in grad school, lots of years getting good at creating software, and lots of years getting good at creating technical products and I don't want the same label as the intern who fixes windoze.
Yes, it's an ego thing; that attitude won't help you earn respect or lead peers. You're no better than an intern starting out fixing computers. In my company there is a distinction between "IT" and "development", who most of the rest of the company considers a bunch of "code monkeys". In a closely related company we partner with, everything is called IT, including development. It's no big deal.
we have to stop referring to all these people as 'IT people' or I'm not going to be able to attract and retain the top-tier talent that is required
I disagree, the best people generally do not have the attitude you do. People who are ego-driven or make a big deal about their title are generally high maintenance under-performers.
Am I just being petty? Should I just forget it? Change it slowly over time?
I think you are being petty and should forget it. If it is a big deal to you then changing it over time is a better idea than confronting the CEO directly about it before you take the job.
Just call them the 'Tech Department' or the 'Engineering Deptartment?'"
I'm not sure I follow here, are you asking a question or suggesting your own answer? Software development is NOT engineering. Just as you are concerned about the overuse of the word "IT", I know many engineers who think the word "engineering" is overused. I suspect none of your advanced degrees are in any form of engineering, and 90% of the people you hire will not be engineers of any sort either.