The solution for this performance problem is to use the inotify linux kernel interface to build a cache of known lower case to real case mappings, as otherwise we have to exhaustively search for the real case when a case-incorrect path is provided by the user and/or Unity itself.
Since this is really a feature request, we need to do more QA work to ensure we don't cause regressions. As such for now, this fix is being provided to the customer as a prototype on the 2023.1 branch only.