I used all-caps in one instance, because it provided the visual emphasis I wanted. In general, though, I think they'd prefer itals for emphasis and bolding for things like section breaks/heads. Closer conformity with the general fanfic publishing style, you know?

(In the hands of 1200 fans, all-caps could be so dreadfully abused it wouldn't even be funny. Except, I mean, it would be lolarious.)

So, unless your story really needs it, I'd advise against heavy use of all-caps.

lolarious

pronounced, "ell oh ell arious" or "low larious"?

Jilli, I think your (light) use of ALLCAPS works, and doesn't need tweaking. That's my 2 cents, anyhow. (Also, my lack of further beta comments after the first pass was due to it not needing more tweaks.)

So, I was looking at the Yuletide uploading FAQ, and it said not to use all caps to denote shouting.

I think that minor use of caps is totally fine. As long as you preview your story to make sure nothing funny happened with the ALLCAPS, I say go ahead. I can think of several fandoms where not being able to use caps would be problematic.

"low larious"

More like this. In similar vein to lollercoaster.

What's funny about caps is that, under the right circumstances, they become invisible (e.g., A Prayer for Owen Meany, which has pages and pages of all caps dialogue). But in most cases, caps draw the eye so radically down/across a page that they can can ruin the flow of a whole passage.

Having seen the passage in question, anything other than caps would look wrong.

I've been reduced to cramming with my source. This is fun. It's like homework.

Typo, Yuletide is an annual small- or rare-fandom ficwriting exchange, where the authors' names are kept secret for a week (or two? I forget) and it all goes live on Christmas Eve at midnight.

This is the 5th (?) year of existence, and every year it gets bigger and bigger, and every year around this time my LJ flist turns into lots of flailing and desperate appeals for beta.

As a non-participant, it's very amusing to watch. Also, there are some fabulous stories to come out of it.

Part of the fun is seeing all the ways you can utterly fail to write your story until the last minute! Actually, that's what inspired me to finally do it last year.

I signed up for Yuletide this year because of peer pressure. But hey! I just uploaded my story.

Typo, if you're at all intrigued there's always the New Year's Resolutions option - ie checking out the list of fandoms/pairings that were requested and DIDN'T get written. There's always a heap of things, and oftentimes it can provide one with a nice storyprompt without having the headache of a deadline to meet.