Vote

[Glenn S. Burke <GSB at MIT-ML>]

I go for option 1.

As an aside (and not to be construed as an argument for this on my part)
i note that at least one place in the manual describes canonicalization
of something (other than READ, i forget what it was) as being done by
STRING-UPCASE.  Maybe it was the names after #\.  I'd have to go searching
to see.