The 1500 Midget clutch is a pain to bleed, I'll agree. I have found you have to do it twice because the air bubbles collect in the high point of the hose while you are bleeding, then you have to close the bleeder, work the clutch a few times (which gets rid of the air pocket in the hose) and bleed again. A fellow '76 Midget owner suggested a method that works for him: Put a piece of saran wrap over the master cylinder reservoir, put the cap on (making an airtight seal) and stomp hard on the clutch several times. I haven't tried this myself. I didn't quite understand what you meant by sliding the collar further out though. The slave has a single clamp bolt that fits in slot on the side of the slave cylinder, so there really isn't any adjustment. The collar that clamps the slave should be bolted tightly to the bellhousing. If you do have it bled properly, you should be getting about 3/4" of travel at the slave end. Also the pushrod is not a tight fit on the clutch arm, so yes, it can move around a little. One other annoying thing I've discovered is that if you take the slave cylinder out and put it back in, you will have to bleed it again. The rubber boot makes a tight seal with the pushrod, and after you work the clutch a few times, the air pocket that has build up inside the dust seal will find its way past the piston seal.
The one real long shot, and I had this problem myself, was if the "restorer" replaced the clutch, maybe it was defective? I had to put a new clutch kit in mine, and the new clutch was a Quinton-Hazell. I spent the better part of a few weeks trying to figure out why it wouldn't release at all, and finally determined that it was either the wrong clutch or a defective one. The springs needed way more travel than it could deliver, and it wasn't until I bought a Borg & Beck clutch (the original) that it worked. I had even looked in through the starter hole with a mirror and saw that the pressure plate didn't move at all.