When great-uncle is used as a common noun, the hyphen and lack of caps make sense. However, when I sign a book to my nephew, is it Great-Uncle Don, Great-uncle Don, or perhaps Great Uncle Don?
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The general rule is that, in a capitalized hyphenated compound word, both words are normally capitalized if they are of approximately equal significance.
In "great-uncle," "uncle" is the more significant part; "great-" is simply modifying "uncle" after all.
So sign yourself "Great-Uncle Don."
Or, dodge the hyphenation entirely, and sign yourself "Granduncle Don."