This is a style question—and one that different style guides have addressed in markedly different ways.
The Chicago Manual of Style, sixteenth edition (2010) expresses clear preferences both with regard to hyphenating al and with regard to lowercasing it:
11.99 The Arabic definite article. Though thee is considerable variation across publications, ...
If you are using a term of endearment as a nick-name then I think it should be capitalised (I'm Australian, hence the 's' instead of 'z'):
“I love you too, Sweetheart.”
However, if it is not used as a nick-name, then it should not be capitalised:
"Jack, permit me to introduce my sweetheart, Heather."