Solution:
If we have two circles diameters d and d′, the distance between which is less than 1, then they are contained in a circle diameter d+d′+1. [If the line through the centers cuts the circles in A, B, A′, B′, then take a circle diameter AB′.] So start with 100 circles of diameter 1/1000 each. If any pair is a distance ≤1 apart, then replace them by a single circle, increasing the total diameter by 1. Repeat until all the circles are a distance >1 apart. We must end up with at least one circle, so the total increase is at most 99. Hence the final total diameter is at most 991/10.