What is the pronunciation difference between collar and color? Can a native speaker tell them apart?
Yes, native speakers can easily differentiate these words.
If you have trouble with IPA, you can try pronouncing them this way (for American English):
color ≈ culler (the vowel is a short "uh" sound)
collar ≈ caller (the syllable following c is just like the word all)
You might try practicing with a sentence like "What color is your collar?" and overemphasize the differences until you get used to the sound.
The difference is quite clear in British pronunciation. Colour is /ˈkʌlə/, rhyming with duller. Collar is /ˈkɒlə(r)/, rhyming with dollar. (I realize those rhymes may not be much help if duller and dollar sound the same in American pronunciation.)
The vowel sound is slightly more open in collar [ɑ] than in color [ʌ].
English pronunciation is not always easy for non native speakers.
A good thing is to be able to read the IPA. Most bilingual paper dictionaries will give the pronunciation of words in the IPA.
And on monolingual dictionaries on the web you can listen to the word as well:
What color was the caller's collar? Thinking about the differences makes me question my pronunciation (and kind of makes my brain hurt). The OP had a good question and the answer varies depending on accent. I pronounce color like cahler, but my husband says culler. My pronunciation of collar is similar to that of color, the difference is very subtle and I don't know how to describe it - for color my tongue is more forward giving a slightly more open/hollow vowel. For caller I say cawler - but not with a southern drawl. My husband pronounces collar and caller the same - cahler.
Color is pronounced much shorter than collar. Pronouncing collar you spend a bit more time on the first coll- part.
For "collar" you say "caw", opening your mouth to about half-open as you say the vowel.
For "color" you say "cuh", keeping your mouth just barely ajar.
In both cases, the second syllable is just lrrr.
Approximate to Kollar (gentle r) and Culla in British English.