What does the "sqlservr.exe -q" option do?

Short answer:

It changes the Collation at all levels: Instance, all Database's, and all string columns in all User Tables. It does this, and avoids all of the typical restrictions, by simply updating the meta-data of the tables, etc to have the new Collation. It then drops and recreates all indexes that have string columns. There are also a few nuances to this method that might have impact, but are fixable.

Long answer:

I have documented all of the behaviors, including listing all of the potentially affected areas by doing such a wide-sweeping Collation change, in the following post:

Changing the Collation of the Instance, the Databases, and All Columns in All User Databases: What Could Possibly Go Wrong?

Warning:

This option is undocumented (well, not "officially" documented), meaning: unsupported (use at your own risk ; it might work perfectly, but if it doesn't, Microsoft isn't going to help or be liable)

Take care, Solomon..