In general terms, he was a commoner--he wasn't royal. Technically, you're right. He was the heir to a Dukedom which would place him at the top of the non-royal foodchain of the aristocracy--2nd only to royal princes.
" No such marriage, between a daughter of a Sovereign and a British subject, had been given official recognition since 1515, when Charles Brandon, the first Duke of Suffolk, married Mary Tudor. Louise's brother, the Prince of Wales, was strongly opposed to a marriage with a non-mediatized noble. Furthermore, Lorne's father, George Campbell, the eighth Duke of Argyll, was an ardent supporter of William Gladstone, and the Prince of Wales was worried that he would drag the royal family into political disputes...The new breach in royal tradition caused surprise, especially in Germany, and Queen Victoria wrote to the Queen of Prussia that princes of small impoverished German houses were “very unpopular” in Britain and that Lord Lorne, a “person of distinction at home” with “an independent fortune” was “really no lower in rank than minor German Royalty”.
QV wrote to the Prince of Wales in 1869:
“ That which you object to [that Louise should marry a subject] I feel certain will be for Louise's happiness and for the peace and quiet of the family… Times have changed; great foreign alliances are looked on as causes of trouble and anxiety, and are of no good. What could be more painful than the position in which our family were placed during the wars with Denmark, and between Prussia and Austria?… You may not be aware, as I am, with what dislike the marriages of Princesses of the Royal Family with small German Princes (German beggars as they most insultingly were called)… As to position, I see no difficulty whatever; Louise remains what she is, and her husband keeps his rank… only being treated in the family as a relation when we are together… "