Use small caps.
Small caps are a specialized letterform. They are a smaller set of capital letters (often a bit larger than the x-height), used in place of the lowercase letters, which are designed so they have the same color as the rest of the font. Many of the OpenType Pro font families have real small caps.
Faux small caps
One of the typesetting options in most professional software (and many word processors) has been the use of small caps. Most of you are probably familiar with this from tutorials of any of the professional publishing programs. Small caps are capital letters that have been proportionally reduced to the x-height and used in place of lower case letters.
The problem is that you may have never seen true small caps. What we normally get is proportionally reduced caps. This makes small caps look much thinner and lighter than the capitals they are with. With true small caps, the stroke weights of the small caps are the same as for the caps and lowercase of the normal font. There are quite a few specialized fonts that have no lowercase — just caps and true small caps. There isn’t room to fit true small caps into an 8-bit (256 character) font that already has lowercase letters.
The obvious problem in this posting is that I cannot show you true small caps. They do not exist on the Web—or in ePUBs or Kindle books. When you can use them at all, you get proportionally reduced small caps.
Small caps are required in typography
There are only a few places where small caps are required—more on that in a bit. However, I strongly agree with Bringhurst here. He has many other places where he recommends small caps. What we are basically saying is that strings of caps within body copy should be small caps. Otherwise these acronyms and abbreviations appear to be shouting.
There are several considerations attached to this position. First of all, this use of small caps is coupled with the use of small cap figures [which are very rare, unless you use my fonts] or old style figures [lowercase numbers]. Second, small caps are often, but not necessarily, used only in body copy. If you use them in a headline the extra boldness of the capital letters needs to be fixed. I remember many hours spent playing with using a Medium weight for the small caps and a Light weight for the caps to keep the type color right [or Semi-bold/Medium, or Bold/Semibold].
Your task, should you accept this venture, will be to convince your copy editor that this is correct procedure. Most of them are using old, newspaper-based, manuals of style. Basing typographic style on newspapers is like basing fashionable dress on Wally World.
Nevertheless, there are a few places where you use small caps even if you do not have true small caps. For times and dates, the proper use is not A.M. or AM or a.m. but small cap am. The same is true of pm, ad, bc, bce, and ce. In these cases, you always use small caps with no periods.
But what about statements like USA 1776? Here the determining factor is whether or not you have oldstyle or small cap numbers in your font. In general, you should always use oldstyle numbers in body copy, at least. So, all strings of caps like this should be small caps: ASCII, USA, UN, USSR, CIA, NASCAR, and so on.
Adding letter space for readability
To increase readability, you will need to add letter space to the small cap strings (though a good font will have this built in). This should be designed into the font you use. You should also do this if you are using all caps for headlines. Seriously, any time you are using words made up of capital letters you need to add space between the letters until they become readable. The guiding principle is to add as much as you can without causing the letters to separate into individual characters instead of a unified word.
Lining numbers with all caps
Even though we have stated that lining numbers are really only appropriate for bookkeepers, accountants, and CPAs [this looks better in small caps also], there are other appropriate uses. One of these is in the midst of all caps.
Yes, there are occasions you will be using all caps. You will have to letterspace to help readability. In this situation oldstyle numbers would look foolish.
Readability is crucial; common sense is required.