Is this the expected output? There is no fn:collated-only function, so I'm assuming you're asking how to write such a function or whether there is such a function.
The thing is, there isn't a mapping from one string to another in collation comparisons, there is only a comparison algorithm (the Unicode Collation Algorithm) so there really is no canonical kind of string to return to you, and therefore no API to do so.
Stepping back, what is the problem you are actually trying to solve? By the rules of that collation, "dollar" and "Dollar" are equivalent, and by using it you declare you don't care which form you use, so you could use either one.