That CASE won't return a conversion in SQL Server 2008 either; there is only one data type being returned a varchar(1), which is the value '' (the NULL will be implicitly cast to a varchar(1), as it doesn't have a defined datatype when you declared it).

I think you're misunderstanding how a CASE expression works. If you have the expression:
CASE WHEN A IS NULL THEN '' END
The above can only return 2 values. The first value is '', which is when A has a value of NULL. Otherwise NULL will be returned, as no expressions within the CASE evaluated to TRUE. To return the value of A is it isn't NULL you would use:
CASE WHEN A IS NULL THEN '' ELSE A END
However, then you would likely be better off using ISNULL:
ISNULL(A,'')
This, however, will still suffer conversion errors for what you have.