One of the new features in Flash MX 2004 and the new Flash Player 7 is ActionScript case-sensitivity. Case-sensitivity is enforced only if the movie is published for Flash Player 7, and is not related to whether it is ActionScript 1.0 or 2.0.
For example, a Flash MX 2004 movie set to use ActionScript 2.0 and published to Flash Player 6, is not case-sensitive: swfoo and swFOO are the same.
On the other hand, a movie set to use ActionScript 1.0 and published to Flash Player 7 is case-sensitive: swfoo is different from swFOO.
So case-sensitivity is determined by the Flash player setting, not the version of ActionScript used. Thanks to Chafic Kazoun for the tip.