Correct, there is no alphabetical comparison facility in Keyboard Maestro. In part because it is a humungous can of worms to open - which order are any of these:
- "and <=> “Alice”
- “The Play” <=> “Rest”
- “Hello” <=> “こんにちは”
Numerical comparison is well defined - alphabetical comparison is not without a lot more information.
For your workflow, assuming plain ASCII, I think I would use a variable with the list of choices separated by newlines, and use the sort command to sort it, and a search and replace to change the newlines into vertical bars for creating the popup menu.
But there are many possibilities, all equally valid.