I'm ashamed to admit I didn't get the connection of the name to "key value" until this comment. So do you yourself pronounce it kee va loo or kee va lyoo? As an American, I see no distinction between the sounds of 'loo' and 'lieu'.
Also American, I pronounce loo /lu/ and lieu /lyu/, in IPA.
I do commonly hear the expression "in lieu of" rendered "in loo of" but have always considered that incorrect, much like pronouncing the t in "often".
It is, of course, just dialect, and the entire idea of 'incorrect pronunciation' is suspect! But I can't help but consider /lyu/ to indicate a higher, er, register.
The standard American pronunciation of lieu is "loo". Some people who read the word before ever hearing it (itβs a rare word in ordinary speech, more common in writing), or maybe took a high school French class and want to sound fancy, say something like "lyoo" instead, but this is non-standard and uncommon. (Neither of the two is a correct pronunciation in French.)
I think it really depends on where you're from. I've been hopelessly trying to teach my wife 'perfect' English pronunciation at her request, and the best advice I came up with is to talk with your throat and not your mouth. At least in the Southeast, this works almost perfectly. But we say 'loo' if anything at all, it's a pretty rare word.
From my experience, the more north you go the more you talk with your tongue/mouth. In my examples I was almost able to complete full sentences without moving my lips at all.
