MacDonald has been in temporary charge of first-team affairs at Villa Park since Martin O'Neill resigned three weeks ago.
The former Liverpool midfielder has been on the club's backroom staff for 15 years and Collins is pleased he now wants to be considered for the top job.
Collins, who is now with his Wales team-mates preparing for a Euro 2012 qualifier against Montenegro, said: "Kevin has been at the club a long time and has the total respect of the players.
"All the players have worked with him when they have been coming back from injury in the reserves.
"It would be great for him. There would be no grumblings coming from Aston Villa and I think he has done a great job.
"We have all got the highest respect for him."
Former Liverpool midfielder MacDonald has had mixed success since taking over from O'Neill.
Victory over West Ham on the opening day of the Premier League season was followed by a 6-0 thrashing by Newcastle and a Europa League exit at the hands of Rapid Vienna.
His side bounced back, however, with a 1-0 win over Everton on Sunday and Collins was impressed by the way the Scot fired up the players.
The 27-year-old added: "He told us, coming off the back of a 6-0, we had to show some fight in front of our home fans. "He made sure we knew it was a big game. He gave us the rallying cry and we responded."
Villa now have breathing space to make an appointment with their next game not until they travel to Stoke a week on Monday.
Collins said: "We haven't got a game for a couple of weeks and it's about time we got something sorted.
"Hopefully it'll be done by the time we get back."