I guess based on AD synchronization you have two different administrator user accounts - the internal Alfresco and the one synchronized from AD. And I guess your AD account is named "Administrator" which Alfresco synchronizes with the identical case. But both the AD and Alfresco are set to accept user names in a case-insensitive manner, so the login via "administrator" works as well.
I do not believe that any case-changing occurs. It may just be a bit confusing how the different environments, accounts and configurations come together. If all participating environments are configured to be case-sensitive, the confusing should be limited at the expense of some usability (users have to remember the correct case when entering their user names).
Regards
Axel