I know bugger all about rebreathers but don't they have a 100% O2 bottle? Something regulates the O2 level and if things go wrong you don't get enough, that's hypoxia right?
Yes, in CC rebreathers there is an high risk of hypoxia, particularly if the diluent is hypoxic (as common in deep diving). Most common causes are the oxygen valve left closed, or a failure in the system which should release oxygen in the mixture.
However, your post was referring an Advanced TDI Nitrox course. In my knowledge, Nitrox is usually not employed in rebreathers, for normal depths you simply use air as the diluent, and for very deep you can have hypoxic heliox or trimix. No Nitrox...
What the point of using Nitrox as a diluent in a CC rebreather? You have an oxygen bottle, so you can use it for increasing the ppO2...
As said, I have seen just one rebreather using Nitrox cylinders, the OMG Caimano-IV rebreather. A military apparatus, employed by our Italian Comsubin. It operates in pure oxygen in CC, or in pure Nitrox in SC (semi-closed) mode.
In both modes, it is impossible to get hypoxia with such a rebreather...
Instead hypoxia is a quite frequent incident with CC rebreathers using an air cylinder as a diluent.
Which indeed I never used, so I am not an expert on them.