> why isn't the same allowed in 2d for the circle at the beginning?

It is. The picture illustrating the impending cusps is after the two sides of the circle have passed through each other.

It’s not the same. The article goes to that in the second visualisation, and shows that the loop/curl strategy produces a singularity of sorts, making the process non-continuous (two points for the circle, for the sphere it’s a whole circle). Once that is shown it goes on to show it going continuously, even though matter passes through other matter.