Peter. I don't understand the spacer, if the hub flange presses up against the bearing and the bearing race sits up against the shoulder machined into the hub, as long as the bearings are seated properly the distance between the races i.e where the spacer goes is set, so applying a lot of pressure to the nut won't alter the spacer's length. If the spacer is shorter in length than the space provided no amount of pressure will make a difference.
So saying mine aren't sitting right surely tightening the nut will only lock up the hub,it will have to be slackened off to achieve the desired setting.
Tapered bearings don't need a collapsible spacer to set bearing preload, just an adjusting nut and a means of locking the nut in place e.g. look at front hub bearings on a 500.
But at the rear you have a driveshaft involved, so the driveshaft coupling is also held in place by the bearing adjusting nut. This coupling is on splines and needs to be clamped tightly to the shaft to prevent wear and ultimately failure of the splines due to fretting (slight movement back and forwards as power is applied and released during drive/over-run conditions). This is why I believe a collapsible spacer is utilized here.
When a rear hub is assembled with bearings and a new (un-collapsed) spacer, normally you'll find that there's way too much free play in the bearings i.e. no slight pre-load as required for correct bearing function.
Initially as you tighten the hub nut, nothing seems to happen. But the driveshaft coupling is being firmly clamped....
Continued tightening of the hub nut will eventually (whew! big sigh of relief!)cause the spacer to start to collapse (as designed). Care is needed now as the bearing free-play rapidly reduces towards zero. You're aiming for a slight pre-load (drag) on the bearings. This ideally should be measured as others have shown using various rig-ups at home. If you're not careful, it's easy to overdo the hub nut tightening resulting in too much pre-load on the bearings. Backing off the nut is not the correct way (although many do it!). What is needed is to start again with another new spacer or as I suggested in an earlier post to fit a thin shim (like a thin washer) between one of the bearing inner races and the now collapsed spacer (to allow this spacer to be re-used).
But when things are set correctly, bearing preload is correct.
AND the driveshaft coupling is firmly clamped in place also. This is because the driveshaft coupling is clamped by the nut to the inside inner bearing race, which is clamped to the spacer, which is clamped to the outside inner bearing race, which is clamped to the hub driveshaft (which carries the brake drum and road wheel). The collapsible spacer keeps the inner bearing races the correct distance apart so that pre-load is correct, while allowing the driveshaft coupling to be securely clamped also.
So, you probably could omit this spacer or if you overcollapse it, simply back off the hub nut until bearing preload is again correct and get away with it. The only risk I can see is possibly accelerated wear of the splines on the driveshaft coupling.
AL.