Are contractions handled correctly in Mimer SQL?

Yes, here is an example:

SQL>-- In Danish AA is a contraction equal to Å
SQL>create table t(name varchar(10));
SQL>insert into t values(U&'Aller\00F8d');
SQL>insert into t values('Aalborg');
SQL>insert into t values('Århus');
SQL>select * from t where name like 'A%' collate danish_1;

NAME 
==== 
Allerød

SQL>select * from t where name like 'Å%' collate danish_1;

NAME 
==== 
Aalborg
Århus

SQL>select * from t where name like 'AA%' collate danish_1;

NAME 
==== 
Aalborg
Århus