Doesn't seem to be anything to do with Flat View. That command won't collapse groups in any mode as far as I can tell.
Commands/arguments that generate a list of buttons can't generally be mixed with commands that don't. It's most likely being interpreted as just Set GROUPBY=grouplist and the other arguments are being ignored.
You can sometimes include other commands you want to run in each generated button within a [...] block after the main command that makes all the buttons, but I don't think that has been set up for this command. (Something we can probably add, though.) Although, in this case, you really want a way to run the extra commands before the main one, since Set GROUPCOLLAPSE=on affects what happens the next time things are grouped. (While Go GROUPCOLLAPSE * would work to collapse all current groups, which would work, but they'd be expanded for a moment first.) So we might need to handle this specially anyway, and maybe make Set GROUPCOLLAPSE=on GROUPBY=grouplist work or add a new argument to collapse the change that the same line is about to cause without affecting subsequent changes (which would be better, I think) and make it work when generating a list of buttons.