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Consider using an External Security Manager product for mixed-case passwords.
Without RACF, ACF2, Top Secret, or VM Secure, the passwords are in clear-text in the directory. Adding mixed case support for passwords stored in USER DIRECT would create a false sense of improved security when there isn't any. In today's world, it is an automatic security audit failure to have unencrypted passwords.
I'm curious what product the user has for security. They don't want RACF... do they have VM:Secure? VM:Secure can do mixed case passwords up to two hundred (single-byte) characters long, and store it encrypted.
Having said that, if CP took the (up to) eight char password and didn't do any translation on it, that seems like a good and simple thing to do. If you really need more than an eight any-thing-you-can-type character password, use an ESM.