Martin:
-- and that's my point -- and has remained my unanswered question. So, specifically why does the "process" (nameprep, rule #3, "plan 9 from outer space", or whatever) prohibit code point 07E?
Nameprep (RFC 1391) does not prohibit the character. Step 3 of ToASCII prohibits it for backwards compatibility, in order to protect the stability of the Domain Name System.
In summary, my claim is that if you can map uppercase "A" to lowercase "a", then you can map the TILDE to the TILDE OPERATOR.
Yes, but that would have no effect to IDNA, as I have explained. Even though Nameprep also maps "A" to "a", that mapping has no effect for a pure ASCII label. Nameprep simply does not affect pure ASCII labels.
Respectfully,
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