Detecting characters in high contrast/oversaturated regions
Use your camera's RAW mode, if it has one, and underexpose. If these concepts are not familiar to you, head over to https://photo.stackexchange.com/

Is the first picture a close-up of the second one, because the letter K on the tag is quite legible? If not, you may also want to use a higher resolution camera, and/or not shoot from such a distance.

If you think about it, you are asking us to robustly encode roughly four bits (on letter of the English alphabet), judging by the first picture. You could simply map the binary representation of the letter to five boxes; four in a square and one on the side, so you don't get any confusion due to symmetry. (If you laid them side by side you wouldn't know which side is which.) If you need to encode multiple letters, you could try using QR or a barcode.

Your first order of business has to be getting the exposure under control. I'd investigate the possibility of using aftermarket firmware if the manufacturer's doesn't give you enough control.