The description allows STRING not to allocate in the case of symbol or string input, so it seems to me that (string #\Newline) should not require a "#." in front of it in user code to obtain a constant string of one newline.
And if through macroexpansion we end up with (string 'foo) this should be folded to "FOO". 

Sound ok?
 
Description:

Returns a string described by x; specifically: