Yes its unfortunate about the compatibility issue with highlighting but that
goes above what is being addressed in this bug report.
Most word processors have a 'highlight' labelled button so i dont think it is
suitable to confuse users with not having the same. If the highlighting
definition and mechanism works the way it is supposed to with ODF documents,
that would be the priority for LO's interface.
Yes defining a difference for 'character background' and 'highlighting' is
good, but to regular users, they are equivalent to the same thing. The most
confusing part was having 'highlighting' and 'background color' buttons next to
each other, which is one of the reason why 'background color' was been removed.