Conclusion
Based on the experiments that I conducted, I would conclude that the digital camera does indeed take specularities into account. The camera sensors seem to be smart enough to account for both the specularity and the color-cast (illumination) under a variety of conditions and renders an output image that is truely color-balanced with colors very close to the ones in the scene (input image). The color-balancing process inside the camera, however, is sophisticated and the basic model that we used of "dividing by the white point" falls way short on delivering output close to what the digital camera prodeuces.
Further Work
One possible area of further work is to come up with a better algorithm than the one tested in this project. The digital camera seems to be doing much more than just dividing the RGB values of all the pixels in the image by that with the highest Y-value. A better algorithm would lend us further insight into the inner-workings of color-balancing inside the digital cameraand and a head start in our reverse-engineering attempt.