Oddly, even after racing enduros for many years and working for a good while at a motorcycle shop, I can't recall anyone having a completely boogered shock thread situation. I've seen some threads slighty hammered but not fatal. The collar is usually steel and of course the shock threads are aluminum. Since you have the shock off, have you cleaned the shock thread area with soap and water? Then use some spray lube...real lube, not WD40...on the thread and collars to see if you can get the collars to go past the damaged area...without any notable force, of course. Remember that the collars need to be separate when you move them, not locked together. In experimenting with trying to move the collars up and down past the damaged area, apply some antiseize to that area. That stuff amazing lets threaded elements operate sometimes even in cases like this.

Another thing...you might see if you can find a machine shop or someone with a good "thread chaser" tool to help clean up that area on the shock. The thread chasers I've seen and used look like a square file about a 1/2" square that have different thread sizes to match the area you're trying to "clean up". I'd bet the steel collars are undamaged, but obviously inspect them for any notable damage. If you can get functioning threads and collars out of all of this, just make sure any final resting adjustment points for those collars don't come to rest right on that damaged spot. Live with a little more or less preload, but don't lock those collars on that area.

 

Many chain auto parts stores like O'Reilly loan thread repair kits that include the thread files mentioned above.

 

If you think your final adjustment will end up with the threads into the damaged area, just add a spacer washer to move the clamping rings on up the unit to the good threads.