The implications of this line (and perhaps the usage of remove-up elsewhere) violate the spec's stated difference between :up and :back. :up requires a probe of the filesystem to determine what the path actually resolves to, while :back does not. I don't see remove-up doing such a probe.

Either way, automatically doing this even were :back present is inconsistent with how pathname literals are interpreted. For instance:

(inspect #p"/foo/bar/../stuff.txt")

You will see that :UP is still present in the struct and the path has not been normalized. Other main implementations also do not do auto-normalization within make-pathname.