The material optimization window recommended mats that should give me Rank 3 results. However, when plugged into the actual crafting interface, it results in a Rank 2 item.

Yes, it's an embellishment with +25 difficulty for the rank 1.

does the heradly give difficulty?

I found a related case, where the work order material optimization is completely wrong without any optional reagents.

In this case, there is no possibility of reaching rank 5. The recommended materials only give rank 4. Using all rank 3 mats also gives only rank 4. This character is mail-specialized and has zero points in leather.

Actually I was only part right. The Forged Aspirant's Heraldry (top slot) adds +50 recipe difficulty. That might be the offset. Testing in simulation mode with the different heraldry options, it's not changing the recipe difficulty.

Fixed with the pvp reagents fix