Drag and Drop Into Collapsed Item?

Is there a way to drag and drop an item into a collapsed item?

I can easily drop an item to be AFTER a collapsed item. I know I can the hit tab to move the dropped item inside the parent (collapsed) item. I’d like to know whether there is a way to drop it directly into the collapsed item rather than after the collapsed item.

Yep, drop it at the right half of the screen. Let me know if that works for you!