One very annoying trait in Max is that you cannot add a material into the scene if there is already a material on an object in the scene with the same name. When you attempt to apply a material with a duplicate name, Max prompts you to either Replace it or Rename the material.
This is really bad for several reasons. Why? Because this is just an arbitrary convention in the UI (probably a relic of early versions of Max that only allowed unique names). The actual Max scene does allow identically named materials if applied in other ways (via MAXScript, opening a scene that already has the duplicates, or duplicates buried in Multi/Sub-Object materials).
As soon as you have a material applied, you can change it to the name of an existing scene material and Max won't complain. It's only when adding a material.
Since it is technically allowed there is no reason to try to enforce it when adding to the scene. If there are good reasons to keep the prompt when applying duplicates, then the prompt needs to be updated so that it has a third option to use duplicate names in the scene.
You may ask why one would want duplicate names anyway? One reason is that your materials may be representations of materials in some other system or dataset (for example, materials in a game engine). If you want to utilize the same material one several objects but on some of them to have different texture transformation in their BitmapTexturemaps (perhaps chanign their tiling value or rotations) then you can make copies of the material and change the transforms in the texture--but you need to keep the same names so that when sending back to your game it knows they are still the same material.
