Trees are always case sensitive.  The index is always case
preserving and will be case sensitive when it is turned into a
tree.  Therefore the tree and the index can and should always
be compared to one another case sensitively.

This will restore the index to case insensitive order after the
diff has been generated.

Consider this a short-term fix.  The long term fix is to have the
index always stored both case sensitively and case insensitively
(at least on platforms that sometimes require case insensitivity).