You lock up 1.75 bts in contract.
You get 1 bts worth of loan (e.g. bitUSD)
... which means that you invested 0.75 BTS (1.75-1) to short 1 BTS worth of asset, which makes your leverage equal 1/0.75=1.33.
No matter what exactly you do: you may deposit 0.75 USD, buy BTS worth of 0.75 USD, short 0.75/1.75 bitUSD, add BTS to collateral, short more bitUSD, ..., repeat this infinite number of times; or you may deposit 1.75 USD, buy BTS worth of 1.75 USD, issue 1 bitUSD, convert it to USD and withdraw it back to your bank account. The end result is the same in both cases: you short 1 bitUSD, you have 1.75 USD worth of collateral locked, your investment is 0.75 USD => your leverage is 1/0.75=1.33x. Period.
Higher leverage is done by reborrowing bitUSD by using BTS, the BTS you have from buying it with previously borrowed bitUSD to repeat the steps.
No, this does not change your leverage. Leverage depends only on collateral ratio.