Josh,
I spoke with support this morning and they indicated that this kind of behaviour was to be expected. CD's are encoded in a PCM format vs. DVD's in a Dolby Standard. As such, CD's will generally be louder sources than DVD content, and the lack of an industry standard for PCM causes CD volumes to be all over the map from production house to production house. The Normalize feature attempts to correct the variances and will lower the playback of CD's to the lowest common denominator in the system -- not just what is currently playing. This will ensure level playback of mix albums.
In my situation, this feature could actually help. By lowering the volume floor for CD's, I can actually raise my default volume for the source. This will hopefully reduce the difference between CD and DVD volumes.
Thanks,
Chris