Following the example provided in the documentation. What happens when both vault 1 and vault 2 are locked at the same time. If they are pointing to each other, it would seem this results in a dead lock.
How do you recover from this situation?
They are not pointing to each other, though. In the documentation, Vault 2 auto-unseals via Vault 1, but Vault 1 uses some other unseal mechanism - possibly human operators manually entering unseal keys.
(Two Vaults each attempting to provide transit auto-unseal to each other, would, as you suggest, be a catastrophe waiting to happen, as they would both be lost if both sealed at the same time.)