What does "clearing 50% of the billing rate" mean? They charge the client $100 and they pay for $50 as a 1099? You should definitely get the 20% bump even if it passes through 2 vendors. Thin margins my ass.
As far as travel, you can expense it on your tax form. You're 1099. If the IRS questions it, it'll go back to your agency, who is controlling your location and time of work, which makes you more of a W2 employee.
If there's a staring contest, can you afford to lose? Will they blink first?