SSDT 2010 and SQL70590 errors

Question

I have Visual Studio 2010 SP1 with SSDT (with Dec 2012 update). I have created a new SQL Server project and imported objects from a database on a SQL Server 2008 R2 instance. The database has a compatibility mode of 80, can't change this at the time.

Anyway. When I do a build, which has to be clean in order for me to do a schema compare, it is throwing SQL70590 errors on the variables although SQL Server itself has no problem with them. Looking at them it seems it is because of the case sensitivity of the variable (e.g. declared as @VARIABLE but referenced as @Variable).

The database collation is set to Latin1_General_BIN, is this why the error is being thrown? I can't see why it sees it as an error yet the procedure code runs without error on the database.