The wearing of collar rank came about during the SAW/PI campaigns. The M1898/1899 uniforms used "False Embroidered" ie pin on metal rank devices attached to shoulder tabs on the tunic. In the tropics, the tunics were quickly set aside, but officers still wishing to wear rank began pinning these devices to their shirt collars. Pictures from this era clearly show this, there's some in our GAF weapons historical photo's thread. I'm not sure when this became formalized, but by the time of the 1904 regulations it was a common, accepted practice. There is precedence for this in the M1895 undress tunic, which utilized US, Seal, and branch devices pinned to its stand up collar. So the use of a collar as a display area would not be a new idea to these officers. Naval Officers and Midshipmen had been using collar devices well back into the 1880s.