This is expected behavior and not a limitation with CMT for Exchange. When creating an Anniversary in Lotus Notes, the default free/busy is set to "Penciled In". When this calendar entry is migrated to Exchange, and viewed through Outlook, the message is marked as "Tentative". In Lotus Notes, "Penciled In" entries leave the user's state at "Available". In Outlook, "Tentative" entries cause the user to appear unavailable in a free/busy view. The free/busy in Outlook is working as expected when an Outlook calendar entry is marked as "Penciled In" (Tentative).
The Binary Tree approach is to maintain full data fidelity for objects that are migrated. There are 4 possible free/busy states for any calendar item: (Free, Tentative, Busy, Away) - these all have equivalents in Domino, and when we migrate a calendar entry from Domino, we are very careful to match the correct free/busy state.
There are differences in the way each platform (Domino vs. Exchange) renders these various states. Exchange tends toward higher visibility of the tentative state in particular. It may take some time for users who are moved from one system to the other to adjust to the way the new platform deals with calendar rendering, and there should be some education and training which accompanies the migration to help users understand how best to use and apply settings that may be different or unfamiliar.
Exchange also employs auto-booking, for example, which shows tentative appointments on the calendar even if they are not yet accepted. These are differences in the platform which must be integrated into users daily use and operation of the various technologies through education and training.
In the case in question, the way Domino renders a tentative meeting and the way Exchange renders a tentative meeting is different. If we were to make a change which forces all-day events to be marked "free", we would undoubtedly be corrupting the data for users who do not wish to lose the tentative nature of some meetings. Users who wish certain meetings to have a different value than what is stored should change those values explicitly, since they are in control of the Free/Busy state of their own calendar entries - and are the only ones with the knowledge of how they wish those particular all-day events to be rendered.
There is a mechanism in Domino Free/Busy which allows mapping of the "Tentative" state of all meetings to "Free" when it comes from Exchange, but this is a big hammer for what appears to be a small problem that may be better solved by making manual changes for those users who wish certain meetings on their calendar to be "Free" instead of "Tentative".