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Correct, you can capture Moses, even if you control Moses. Previously you had to choose one to discard. That is no longer the case. Just as a captured Hero cannot be targeted as a Hero (think banding or Christian Martyr) a captured character does not count towards duplicates because it's treated as another card type (usually a Lost Soul).
He can definitely capture it. IIRC, captured characters lose their uniqueness or something. I remember this getting changed, don't remember the ruling.