OK, I am now back. :) I am trying to be polite, because Fools you ask a reasonable & sensible question and I don't mean to be rude, but I may come across as harsh as I think flooding a dog is really stupid. I don't apply this specifically to collies, although they have more extreme responses because they are sensitive intelligent dogs and have the ability to "over-think" things.
Flooding a dog is an old technique that was used by old fashioned trainers to make a nervous dog give up. In a nut shell, what flooding means is, the trainer would constantly harass the dog unmercifully until that animal accepts it?s fate of death (In their mind, anyway) and gives up. Or to put it another way the dog trainer would make the nervous dog so nervous that the dogs brain would finally shut down.
When some people see the immediate result that the trainer accomplishes with this type of behavior modification method, they are impressed. They are impressed because what they see is effectively "a cure".
This is probably without a doubt the absolutely stupidest way to deal with a nervous dog. The most common responses you will see in a dog when he meets new people after he?s gone through the flooding treatment are, (1) he will make sure he acts like a bigger maniac the next time someone tries to come near him. or (2) he will slink away from everybody.
In either case the dog will pretty much be miserable.
All that has happened, is that you have negatively reinforced the fact that (in the case of the OP) strange people/crowds are big scary places and he cannot escape. if mum and dad trys to reasure him, he's confirming in his mind that it's scary because mum and dad are not behaving normally, but instead are telling him he has something to worry about. Therefore, in his mind, he is justified in feeling the way he does.
Say Fido is scared of strange dogs, but we keep walking him past strange dogs and offering him Scooby Snacks. He might take them?or he might not, but is food what?s really on his mind? If you say it depends on the dog, you?re right. But you can teach a dog to take food in the presence of other dogs and still have a dog that is scared of other dogs. If you want to teach a dog not to be afraid of other dogs, the best way to teach him is to provide him with escape from other dogs when he does any behavior that is not as scared as what he used to do. (i.e. positive reinforcement).
We do this with our collie girl who is terrified of kids. When she wants to get away from a scary situation - kids, she goes to her bed, where she is not disturbed. That's positive reinforcement, because she is able to get away from the kids and she has a positive result from her actions (gets away from kids). What we absolutely do not do, is expect her to interact with children. It scares her, makes her fearful and snappy. And besides, why would I want to deliberately frighten my dog? Take the same dog to a crowded place on the end of the lead, and she goes into complete meltdown. There are numerous places we've had to take her which are crowded - we haven't ever "deliberately flooded" her and each time where she hasn't been able to escape it's just reinforced that she's trapped in a nasty situation.
fools - when you were advised to flood your dog with a floor covering, did you give it treats and reinforce what a good dog it was when it crossed it? The reason I ask, is that you'd have had time to associate the floor covering with something nice, the dog can show the required behaviour (walking across the floor) and you positively reinforce it straight away. i.e. walk on the floor, get a treat, therefore, floor not scary - IYSWIM.
A dog going to a crowded place is "unlikely" to exhibit the behaviour you want because it will be too busy panicing. All it will be thinking is "Ohshit ohshit ohshit" and it will be very, very difficult to reinforce good behaviour positively, hence the flooding becomes a negative way of training. Plus, you will not be able to remove the dog from the situation instantly you get the required response, which turns the idea of positive reinforcement on its head.
As to collies, the reason I would say you need specialist advice is because 99/100 they out think their owners. 
A collie learns bad habits quicker than it learns good habits and if they are not mentally stimulated, they find their own jobs to do.
I'm probably not making myself really clear, but I've tried to explain what i mean. I am not a collie expert, i just know them better than other dogs in that they are "my breed" like GSD's are dogsbestfriend or Greyhounds are Scuttlebutters IYSWIM?
Fools I am totally biased, I wouldn't have any other dog than a collie (except maybe a black lab gundog). Provided you get the right one, you will have an amazing, intelligent family pet. If your home situation is the right one, DH would be a fool not to get a collie.
I really think, OP, you need to ring Wiccaweys. Paul is a collie specialist and he's seen this behaviour countless times before.