This could potentially cause problems in scripts which handle Nicknames in a case sensitive manner. If suddenly a nick changes without an On NICK event firing, it could screw with any number of scripts expecting a nick that is no longer there.
I'm not saying it's a serious issue, or that the user should be using the +y flag that is not implimented... but the server *could* handle it a little better if it wanted to, and mIRC *could* ignore it a little better as other clients do.
- Raccoon