Model collapse happens in the case where you train your model indefinitely with its own output, leading to reinforcing the biases that were originally picked up by the model. By repeating this process but adding a "grounding" step, you avoid training repeatedly on the same distribution. Some biases may end up being reinforced still, but it's a very different setting. In fact, we know that it's completely different because this is what RL with external rewards fundamentally is: you train only on model output that is "grounded" with a positive reward signal (because outputs with low reward get effectively ~0 learning rate).