Cousins...or not?

My father is an only child. He grew up with some cousins who became very close, like brothers and sisters. Those cousins, like my dad, grew up and had their own children. 

My father's cousins' children are my cousins. From my understanding of family tress and such, they are my first cousins. It is also my understanding that my father's cousins are also my cousins but they're my first cousins, once removed. I believe my cousins' cousins would be my second cousins. 

Who's confused? It sounds confusing - and it very well could be because who said family relationships were anything but? - but, if you read it carefully it's easy to follow.

I bring all of this up because it's my first cousin's birthday today and because of a conversation I had with a friend last week, an Italian-American friend, about something she saw in my novel, Back Kicks And Broken Promises. There's a situation in the book that has to do with cousins and first cousins but, instead of calling the older cousin, once removed his cousin, the character referred to him as his uncle. It's what I do in real life, too, when I address and refer to my father's first cousins (my first cousins, once removed) as my tito and tita (uncle and auntie, respectively, in Tagalog). My Italian-American friend said that in Italy their once removed cousins are still referred to as cousins.

So, I write about all of this because, first, I'd like to know what you think? First - and I guess I could consult a family tree resource or website and find out what the accepted definitions are - am I correct in how I've gotten my relationships sorted, regardless of what I call them in real life? Second, I'm curious to know what you do. What's your 'family language' or 'cultural language' when dealing with stuff like this. 

You see, being Asian and growing up in Asia, I found that it's not the actual blood relationship that determines the proper way of addressing someone. Instead, it's the generation and status of a person. Even though my father's first cousins are my cousins also, I refer to them as tito and tita because they're in my father's generation and not my own. This way of addressing people was reinforced during my freshman year of college. I was playing a lot of squash and I'd made friends with other students and squash players from Singapore and Malaysia. One Friday night, I had to shoot home and one of them had nothing better to do so he came with me. We ended up staying at home, eating dinner and hanging with my parents before heading back down to New Brunswick (we were students at Rutgers). My father, in particular, enjoyed the visit because he'd lived in Singapore as a journalist but what stood out was, as soon as my friend met my parents, he politely shook their hands and said, "It's nice to meet you, Auntie" as if he'd been calling my mother that all his life.  And, to my father, he used the term "uncle."

So, what is it for you? Is their a proper way or does it depend on something else? I'd love to hear what you think.