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Ae and Oe ligatures (upper and lower case) are treated as distinct from instances of the two latin letters adjacent to each other.

Searching should equate these two.
Sorting should also equate these two (currently, these sort after Z).

I suspect a change is needed to the normalization code Bob Haschart wrote for solrmarc. So this is really a solrmarc bug, and has been reported on that list.