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By the way.. my online translator is translating "culeta" as "butt" .. this must be a mistake,.. right?
It's not Culeta, it's Culata. The "culata" is the back end of a gun barrel. However the term most certainly derives from "culo" (i.e. the "culata" is the "culo" of the barrel), so you're not that far from the truth.
There's a popular saying in spanish (and also in portuguese) that is "salir el tiro por la culata", used in situations when something backfires. This expression originated before ammunition was invented, when the firearms were loaded through the barrel. If the loading process was not done correctly the bullet could get stuck in the barrel and the gun would backfire.
Since his brother Enrique also used the same nickname, my guess is one of his older relatives was known for a backfire incident (either literally or metaphorically) and the name stuck in the family. Same as with other flamenco families: Tomate, Morao, Agujetas, Terremoto, etc...