I'll try explaining my concern a little better. Suppose you have a hash function h. Let p be the probability that h(x) == h(y) for any unique x and y.
Now suppose you have some arbitrary inputs a and b.
h(a) = h(b) with probability p
h(h(a)) = h(h(b)) with probability 2p
h(h(h(a))) = h(h(h(b))) with probability 3p
etc.
The probability at each step increases because a collision is possible at each step, but a collision in a previous step guarantees a collision in the current one.With a good hash function, p should be astronomically low, so I guess that's why it isn't a problem in this case? Or am I completely off-base in my assumptions?