That is surprising. I don't think pure Oxygen rebreathes were ever cheaper in the US than open circuit. Of course Italy had a manufacturing infrastructure for them and rebreathers were only hand-built for the military in the US (outside of the mine safety market).
Italy was a leading manufacturer of regulators and Scuba cylinder valves by 1970. Were there high tariffs on high pressure cylinders?
In 1975 the Cressi ARO 57B, the basic pendular CC rebreather used in diving schools, had a list price of 500,000 £, but diving schools could purchase it for 350,000. A standard twin tank (10+10 liters, 200 bars, steel, with double valve, reserve and harness) was ranging between 300,000 and 350,000 £.
You had also to buy two complete regulators, such as a Scucapro MK5+109, which were 200,000 £ each. In some diving schools they did save some money using just one reg, but still the OC system was costing almost twice than an ARO.
Also in terms of operational cost the ARO was cheap. We were using industrial-grade oxygen and soda lyme, so recharging a rebreather did cost around 10,000 £. But it did last for 4 to 6 hours, meaning at least 4 dives (the last one with significant headache if the student did not learn yet to breath properly, due to exhausted scrubber).
Filling the twin tank was typically 5000 £, but it did last 1 h only, and you need to fill again before each dive.
And finally an ARO CC was much smaller and lighter than a twin tank. Rebreathers were very female-friendly...
My wife (at the time she was my girlfriend) did love the rebreather, both outside water and underwater, as it was light and not bulky. And it did allow her to be perfectly neutrally buoyant, swimming with minimal effort.
The switch to OC systems was a big step for her: luckily she was strong enough for being able to fit the twin tank on her shoulders passing it over her head, which was one of the skills required at the final exam of the course. But many other students with tiny body were struggling raising a twin tank weighting more than 25 kg above their head...