You are confusing yourself. Details of how you short sell your investment does not matter. Look at the end result. If you invest X, maximum you can borrow with collateral ratio of 1.75 is 1.33*X. 1.33x is your leverage, and you can't exceed this ratio no matter what you do.
Well, I guess we disagree on this now. I had almost same doubt beforehand which is why I did this at all.
I've convinced myself by tracing every fraction through the steps in the several examples already both for increases and decreases, done the math on it showing leveraged leverage does increase it, deriving expressions from it, and constantly get same leverage as result in all different ways. Several people in bitshares traders chat confirmed it from independent calculations. e.g.
https://bitcointalk.org/index.php?topic=1949828.msg20122017#msg20122017I'm convinced and I will be pushing for this method to be automated and the main reason behind lending market.