1- Does Google differentiate them? What is Google's behavior, if it finds both of them on my website for a single page?
As Google said, case sensitive URLs might lead to multiple URLs indexed:
“By definition, URLs are case sensitive, and also things like slashes at the end do matter. So, technically, yes — these things matter. They make URLs different.”
[...] search engines will try to crawl all variations of the URL that they find. This can make it a bit slower for them to find other useful content on your website.
They also don't consider it an SEO issue, but they still recommend a single version:
So Google doesn’t consider letter case in itself as an SEO issue, but you should keep it consistent across individual URLs, because Google considers URLs to be case-sensitive. This means, if you have the same page accessible and indexable (without canonicals) as example.com/PAGE.html and example.com/page.html, Google could crawl both those URLs and the one you want to be ranked may not be the one Google chooses. You could also end up splitting ranking signals between the two pages.
2- If I fix casing by making every query string parameter lowercase, does Google lower my rank because healthandbeauty is apparently less readable to user.
Google uses hyphens (-) in URLs as word separators while other symbols (or the lack of it) in your URL will not be recognized. This means using hyphens makes it much easier for Google to figure out what a page is about. So using healthAndBeauty or healthandbeauty should lead to the same result. The perfect implementation should be health-and-beauty.
