I am trying to write a Firefox 3 add-on which will enable me to easily re-tag bookmarks. For example I have some bookmarks tagged \"development\" and some tagged \"Development\"
I can't quite help you with the how-to, however, perhaps the extension 'SQLite Manager' will help you at least for the part where you're trying to figure out what to do. The plugin is a general manager, but it contains the default databases used by Firefox as standard option as well.
Using that extension it should be relatively straightforward to rename the keywords you like. If you're just looking for a way to fix it, this could work, if you still prefer to write your own tool, perhaps this one can at least help with the queries ;).