As a native English speaker this vibe does not compute to me, it just reads as incorrect grammar. In modern usage the word mistress is definitely not used as a general term for a woman in a position of power, that would be very unusual and archaic
As a native English speaker, I'm not sure you know what grammar means.
It's absolutely grammatically correct, and BWG is right; the definition of Mistress is "a woman in a position of authority or control" precisely as specified. Personally I don't care which term is used in the game, but you've written this statement as if it's a fact when it's not. What you've written instead is a personal opinion.
I think the motivation for this term is simple: 'Master' leaves absolutely no room for interpretation about the relationship dynamic.
'Mistress' while usually similar, can have a different connotation, as BWG pointed out.
If your goal is to make it explicitly, irrefutably clear of the relationship dynamic, 'Master' is the safer call, which I'd say applies here.
That said, I couldn't care less which word is used. I just find it strange others are so put off by one and not the other.