Unless I'm mistaken, it works with EnvInject 1.2.
Please could you try?
Regarding the uppercase, it is the expected behavior.

modified testfile which hopefully reflects a better test setup

Sorry for the delay - I didn't notice your update.
I expect the WORKSPACE variable to contain the path value to the workspace directory for the current job.
Maybe the setup I used isn't that straight forward. Also I just realized that my testsetup is not what I expected. I missed the point that setting a custom workspace directory - using a relative path - gets appended to either JENKINS_HOME or the remote root directory for slaves.
Sorry for the troubles.

But one last point I almost missed is that setting environment variables using envinject ignores case sensitivity. Using the following example:
FLAGS=someValue
flags=someOtherValue

kills the second variable and only FLAGS will finally be set.

Any update?
Could I close the issue?

In your sample, when you specify PREPARE_WORKSPACE=${WORKSPACE} for the 'Prepare an environment' envinject section, what WORKSPACE value do you expect?

My little test file used to see if the plugin sets the things my build jobs rely on.

There is now a case where ${WORKSPACE} is not set anymore in the pre-build phase when a referencing variable is used to set a different working directory.
Please see the attached jenkins envinject_test.xml Job file. It also tests some of the previously filed issues. It would be nice to have some tests for your plugin which could be extended by filed cases.

I personally need such a thing to be sure not to update to a newer version of the plugin which breaks features I rely on in my build jobs.

Thanks again for your effort and help.

Code changed in jenkins
User: Gregory Boissinot
Path:
src/main/java/org/jenkinsci/plugins/envinject/EnvInjectBuildWrapper.java
src/main/java/org/jenkinsci/plugins/envinject/EnvInjectBuilder.java
src/main/java/org/jenkinsci/plugins/envinject/EnvInjectListener.java
src/main/java/org/jenkinsci/plugins/envinject/EnvInjectLogger.java
src/main/java/org/jenkinsci/plugins/envinject/service/EnvInjectVariableGetter.java
http://jenkins-ci.org/commit/envinject-plugin/8fdee0a1a42b310b5a1bbfb00f38414fbb001b21
Log:
Fixed JENKINS-12027