'Tail up' in a working collie usually signals anxiety. So does tail-between-legs, as per any dog, but in the first case the collie is addressing the fear with aggression / bravado, in the latter the fear is showing.
Your job as trainer is to build his confidence so that he never needs to fear that anxiety. Starting small with trained sheep will give him the confidence that he can outrun them (he can't outrun adult sheep in the open yet, but he doesn't need to know that

) and that he has the power (in his
eyes,
not in his teeth!) to hold them and to turn them. (Again, he won't in fact be able to do this with older, bolshier sheep for a while, but again, he does not need to know that

)
Sure, you can move sheep with a collie operating with his teeth, tail up, full of bravado. But you won't
control sheep with that dog.
The collies with the most power move the least. It's all in the stance, the eyes, the confidence.
And yes, in the real world, the dog has to know how to use his teeth when it is necessary. But if you let him do that from the beginning he will probably never develop his real power. So my preference is to teach them confidence in their own power, skills and dominance over sheep by building on success - small steps, always set up for success, never putting the dog in a position where he is frightened or not sure what to do.
He needs to learn that he can make those sheep do anything - and that if he doesn't know how right now, that
you will give him the command that makes it all work.
Once he knows that,
then you teach him to use his teeth. But on command, under control, and only in the ways that
you stipulate and when
you say so. Generally, a nip to the back of the leg to encourage from behind - but it must be the lower part of the leg, not the fleshy bit - and a snap to the face with a bolshy sheep. Skip's an artist with that one, he hardly ever makes contact but he shows the sheep unequivocally that he
could and he
would if he had to.