Bob, when a short gets called, how can those kind of dollar amounts buy bitcoins at a specific market price (instead of considerable slippage)?
Or is it a forced market buy for $2,554,207 when the bitcoin price exceeded $6,607.5 (first example)? How would the shorter then guarantee it can pay back all the bitcoins lent?
(not a trader as you might have noticed)
They don't, they always get bought at market prices. That's why you have (a safety) margin as a buffer.
Depending on the rules of your platform, you might have some funds left after getting margin called.
EDIT: If volatility is larger than anticipated, and liquidity is low, there might be insufficient margin, so exchange platforms might have to freeze trading, cough up funds themselves, or socialize the losses to other (winning) traders.