They work just fine, as the drive-specific CWD is stored in the environment as a normally-hidden =<drive-letter>: environment variable which has all the same WTF-16 and case-insensitive properties as drive letters:

    C:\> cd /D λ:\

    λ:\> cd bar

    λ:\bar> cd /D C:\

    C:\> echo %=Λ:%
    λ:\bar

    C:\> cd /D Λ:

    λ:\bar>