Here comes a long and convoluted post as I write out my thoughts on the 
matter... can you tell I'm a language student?  ::grins:: But I'd be happy 
if somebody out there can offer a few suggestions, or even just give me more 
ideas... ideas are *good*...
 
Okay, here we go:

Why are there 'Muggles' and 'wizards'?  Why not 'muggles' and wizards, or
 Muggles and 'Wizards'?  Surely it makes more sense to be consistent?

Given that the wizarding community is (I think...) much smaller than the
 Muggle community, wouldn't it make more sense to capitalise the word 'Wizard' 
instead, as wizards are rarer?  

OTOH, most of the book is shown from the wizarding POV, so maybe they
 refer to Muggles with a capital because they're seen as a separate species from
 us (ie, we capitalise 'Wookiee' but not 'human').  Maybe the wizards don't 
consider Muggles to be the same species, despite the fact that they obviously 
can interbreed --

(thinking of dimly remembered biology lessons here... am I wrong in assuming
 that, loosely, individuals are only considered the same species if they can 
interbreed?  I may be completely on the wrong track...)

and that view comes from 'pure-blood' families?  Maybe an age-old
 predjudice, begun by Salazar or wizards of his ilk, against Muggles?  I'm 
thinking of ancient wizarding families considering Muggles as barely human, 
as beneath their dignity, something less than a dog or a cat (given that 
Animagi can *become* cats and dogs).

(Digression: on that same track, *can* an Animagi transform into a Muggle? 
 Maybe Snapeykins is an Animagi and his form is that of an old crotchety Muggle
 man...  ::giggling:: Maybe Draco Malfoy can, and that explains his bitterness 
towards the less magically-gifted...)

Maybe Muggles are just special.  It seems odd to me, though... oh, wait, here 
comes another argument...

My mind just threw up the words 'Caucasian (sp?)' and 'Mongoloid' (also sp?).
  Would it be correct to classify 'Muggle' as another similar thing?  But then 
surely 'wizard' should have a capital too?  Okay, that argument doesn't 
invalidate my point, good.  :-)

Cats and dogs, though, are obviously not of the same species as us, and they 
don't get a capital letter either.  Maybe it's just *sentient* other species 
that are capitalised (Wookiees, Bothans, Ithorians, Sullustans,  -- Vulcans, 
if you don't like those or even just Martians all get capitals)  BUT they all 
bear no physical similarity to humans.  Muggles and wizards are the same 
physically: my present view is that it's just an extra gene or two thrown up 
randomly that gives us magic.  

(Digression: *does* that make them + us separate species?  Considering 
chimpanzees are only about five genes removed from us...)

Oops, more ideas coming -- house-elves don't get capitals either.  Is that 
because they're considered inferior (like cats and dogs)?  But then, even 
goblins don't get capitals.  (--Can someone tell me if they're given 'being' 
classification by Fantastic Beasts?  My copy's downstairs...)  

That reminds me of something in the beginning of Fantastic Beasts - something
 about extremists lobbying for 'Muggles' to be reclassified as beasts.  Maybe 
a throwback to the Good Old Days of Slytherin?  I've noticed that in FB, most 
of the beasts (Doxies, Chizpurfles, Clabberts) get capitals -- but dragons, 
kappas, fairies, all the beasts familiar to us Muggles remain uncapitalised.  

Now I'm *really* confused.  Having offered up my oddball theories, I wait,
 confident that the massed intelligence of HP4GU will offer me solutions.  
::grins:: I love this group!

--Weaver, who is looking around for a spare GIANT CUSHION to get hold of, 
since she doesn't want to ban herself from occasionally talking to occupants 
of HMS Harry/Ginny