Well, the first thing is that the point is moot anyway because the Celts certainly never referred to themselves as "Celts". "Celtic" came into English via French and Latin. Until fairly recently, and is often still today, the standard pronunciation of the word has been "seltic", as is to be expected of an English word starting "ce-", especially one that came into English via French (where all words stating "ce-" are spoken with an "S" sound) and Latin (which in British pronunciation pronounces all its words starting "ce-" with an "S" sound). Words that have been borrowed from Italian such as cello and ciao are pronounced with the hard "ch".
So, why did the pronunciation change? Simply put, it became fashionable to pronounce the word "keltic". It is now assumed that if you do not pronounce the word "Keltic", you do not know anything about Celts! This is of course fallacious as the Celts did not actually use this word nor probably even recognise it. Basically the main reason that "keltic" is now considered "correct" is sheer weight of numbers - which is how basically any pronunciation becomes standard.
All that being said, pronouncing Celtic as "seltic" has a long established tradition in English and is still correct. I understand there are still professors in Scotland saying "seltic"!
Where did the word come from? Greeks called the barbarians "Keltoi". The Romans took the word and used it as "Celtae". The word then entered French as "Celtes" from which the English derived "Celt" pronounced as "selt". Anyway the Sgaothaich, Dumnonii, Cornovii, Belgae, Durotriges, the people of Dál Riata and others did not call themselves "Celts"!
"Sean Padraig"

