I was considering taking the collars off my cats because they always get their tags wet when drinking and they're starting to get gross (even though I am drying them off constantly). I think what I'll end up doing is getting them both microchipped (it's only $35 at the vet's) and getting them both break-away collars with nameplates attached directly to the collar. The break-aways do work; I've come home once or twice and Tito's has been laying on the floor - no idea how it happened but I'm glad he wasn't stuck somewhere all day like your cat was. Keep us updated on what you decide to do!

PS Getting your cat microchipped is never a bad idea, in my opinion. The peace of mind is worth the $35.