It's not remotely comparable to a dropped catch. A dropped catch is (usually) a matter of fact. Player X gets dropped on Y, then scores Z more runs. If he hadn't been dropped, he'd have only scored Y. Fact.
Selection, quite simply, can never, ever, ever, ever be labelled as something that there is a definitive right and wrong way to go about. The whole process is subjective. Therefore you cannot factually state that what happened at point Y (ie the equivalent of the dropped catch) was right or wrong. As I've said before, selectors are paid to pick on the basis of what they see in players and not just what they see in the scorebook.
Collingwood's record wasn't very good, and if were picking on records alone then of course he shouldn't have been picked. Now I know you aren't suggesting they pick on records alone, so I don't quite get how you can then call any selection a cast-iron error. Colly was picked on the theory that he could provide grit and steel to the batting line-up, in the Hussain sort of mould (he was considered to play in place of Nas in Sri Lanka you will recall). Now this was just a theory at this point, nothing more. There was at the point of selection no way to determine whether Colly had it in him to provide such grit at test-level. He however clearly did and does, the selectors were therefore right. If he had proved himself to actually be mentally soft and incapable of concentration, they would have been wrong. There was no way to determine this until he had had a go in the Test team - it turned out his selection was right.
Luck can make a selection look good. However, if a player succeeds when he has a moderate domestic level we should not assume that this was a lucky selection, as there are often reasons behind such selections. Sometimes they come off (Colly), sometimes they don't (pick an England bowler). But you can normally find the reasoning behind selections when you read interviews, statements etc from when the squads were picked. We can judge what has happened against what was said at the time to determine how shrewd a selection turned out to be.