Say I create a model with a custom material name ("custom5" for example) and save the OBJ in Collections, and then create a separate model in a separate project that has a different material with the same name (again "custom5") and save its OBJ in Collections.  If I then try to add both to a project only one of those materials will properly import. If one material is green and the other is yellow, the second object added will use the first object's "custom5" material. An easy work around would be able to rename materials but I do not see a way to do that.

If I'm correct this is intended. If a material (with a certain name) is present in your current model and you place a block that also contains a material with the same name it'll be replaced with the material of the current model.