Nothing contradictory there. The Persians used the word in the same sense, a nobleman, and they obviously inherited the word from their predecessor language, Indo-Iranian; that would explain how the word got into Indo-Aryan as well, and in the same sense. It is more or less accurate to say that the chieftains, the leading warriors and the priests called themselves Arya.
The others in the tribe, the herdsmen, the butchers, the weavers, the carpenters, the dairymen, the grooms, the common soldiery, the scouts were all the rest of the tribe. When they began to settle down, farmers joined their number; presumably, some kind of storekeepers as well. One could go on from any list of occupations from any wandering tribes in human history.
Nothing contradictory between this and the hypothesis that Indians are not Aryans. Indians (=south Asians) are not; as @
shan points out, an Indian, any Indian is constituted of two different genetic stems, the ANI and the ASI, at least from the last five thousand years; earlier, the population was even more homogeneous, especially after a wave of emigration around 40,000 years ago.
Much of the mysterious Indian genetic material to be found elsewhere, much earlier than they had a right to be, must have come from that earlier wave outwards. What was it due to? A change in climate?
These migrations just around the time of the decline of the IVC and towards the dates of the Vedas, are testified to only by genetic studies and by linguistic records. There is not a single archaeological record, unfortunately, until we come to the 8th century phase of Sanskritisation in Tamilakam, which has been researched so brilliantly by a set of historians from India and abroad (post-colonial, one might add; some leftist, many not, one might add). There the sequence that has been established is of tribal society, of meagre surpluses, and of an injection of Brahmins from 'elsewhere', who converted tribes to castes, radically altered the pantheon, introduced the Vedic (strictly, the post-Puranic) pantheon, introduced agamic worship, insisted on the kingdom as the only acceptable political model, and led to the rise of the kingdoms of the deep south. They also re-organised the agrarian system.
These events are well recorded by epigraphs, and the work done on them is exemplary. They offer us a tempting parallel to what might have happened two millennia earlier, around 1500 BC and earlier, in north India. The gap between the two blocs of time, it is tempting to speculate, might have been filled in by the Sanskritisation of the Deccan; of what is today Karnataka and Andhra Pradesh.
It is notable that where the common folk, the non-Arya component of the migrants were the least, from the earliest books on the subject, the tribes adopted into the caste system were the most, for instance in Bengal and east, in south India, meaning the Deccan, and in Maharashtra. As a result, in north India, the genetic difference between Brahmin and other is minimal; in these parts, it is maximal.
But there is no proof, no concrete evidence, no archaeological or historical record, so we are forced to leave these speculations to proto-history and to pre-history.
