Turning on this option will convert the first character in every word to uppercase, also for non-shouting titles....
Therefore, we can't use this option.
Should have been an option here for non-US customers.

Asked IPB support about this and the answer was:
All I would recommend in this case is to leave the function disabled. If the feature is not something that would be useful in your site, you can always leave it off.
:huh:

This stems from the same issue as localized dates.

In order to support this we need to allow non-English users the ability to set the locale. Otherwise pretty much all string functions do not necessarily honor your local cases (upper vs lower).

I've seen this more as an issue in languages like Greek, etc, where non-latin characters are used.

This is being thought about and discussed.

If you wish to do this yourself in the meantime, add this in index.php with your correct locale

http://us3.php.net/manual/en/function.setlocale.php

Thanks Brandon!

I added tis to index.php, but problem is the same:

setlocale(LC_ALL, 'no_NO');