Avallond

There used to be more in Old English. Have you ever thought why do you use 'were' as a subjunctive, when you could use 'was'?

You are right; cuarto and habitación are fully interchangeable and the use of one or other depends on the emitter. However, there's a very, very, very slight attitude you must take into account; in Spain, you'd usually say "mi habitación, su cuarto."
 
By the way, I've Castillian accent.. .__.

They are basically indistinct and whatever one is used will more depend either upon the level of education or the region.
Usually, cuarto is more broadly use by the everyday man, and habitacion by people with more... snoob education.
Likewise, certain countries and areas use HABITACION more than CUARTO, in SPAIN for example it would be cleared to say HABITACION.
But you can use any and most of the time most of the people will understand. HABITACION is more neutral.