There is certainly nothing hard-coded in the extension concerning any name pattern like capitalization. Maybe expert mode was used for selection in some way with some regular expression matching only capital letters?

This claim is incorrect; all bookmarks are compared, of course, and folders have no influence at all to the comparison (in non-expert mode).

If you intentionally want, you can trigger behavior similar to the one you described by using replacement rules in "Expert Mode". I assume that you had "Expert Mode" open when you looked for dupes; if you do that, all example rules from that mode are applied simultaneously which is probably never what you want.