I have Mark Known Characters turned on, and it mostly works as expected. So far, I've found two exceptions.
The most frequently encountered is that typing an apostrophe doesn't trigger the highlighting. To get the possessive form of a name to be highlighted, you have to close and reopen the scene.
The other situation I've found is when I decide to make things clearer by replacing a pronoun with a name. Since I don't need to add a new space or punctuation after the pronoun, it never triggers the highlighting.
Both can easily be worked around by typing a space and then hitting backspace in those situations, although the apostrophe and s will only be highlighted after the scene is reloaded.
It's nothing major, but I thought I would mention it.
- Andrew