Hi @callaband,
You are correct, this is almost certainly an issue with your fasta file. Before importing into QIIME 2, run the following command to convert lowercase to uppercase in the fasta file:
tr 'acgt' 'ACGT' < ~/MS_set6/reference-hit.seqs.fa > ~/MS_set6/reference-hit.seqs.uppercase.fa
And then proceed with the import and classification commands that you wrote above. (That command assumes that the sequence IDs do not contain any lowercase acgt characters, so please check first to make sure that IDs are, e.g., numerical. If acgt characters are present, write back and we can do something a little more sophisticated)
We have an open issue related to this error so will provide better support for this issue in the future, e.g., to detect lowercase characters upon import.
I hope that solves your issue! Please let us know if you continue to have the same problem after converting to uppercase.