It does.. For some reason I am having trouble adding only certain images and I need to go back an re-create that.
But, what I think I am trying to say is that I want the Collections to function in a more hierarchical manner. Unless I am again missing something, right now I can only create a nested collection inside a Collection Set. I can't create a 'sub-collection' inside that second, nested set, I have to create that sub-collection next to my nested Collection. Kind of like Folders>Sub Folders>Sub, Sub Folders, etc.
I think you may need to do some more reading around metadata, keywords and collections, smart collections.
It seems to me that you are trying to use a powerdrill as a hammer.
It may sort of work some of the time, sort of, but really it is still best used as a powerdrill rather than a hammer.
So what I am trying to say is that you should not be needing to deeply nest collections in the manner of folder structures and collections are not really designed to be used thus - because it isn't necessary.
I think your workflow needs a redesign that actually takes advantage of the strengths of Lightroom.
Get yourself the video tutorial, "Where the @#$% are my Pictures" available on this website.
Although the whole video deals with much broader issues it does give an excellent primer on the sorts of issues that are giving you such headaches.
Also, if you do have further questions to raise it might be best to start a new thread since this one is dealing with a wishlist for Lr5 and your questions revolve around workflow issues in the Library module.