Thanks for the responses.
So the CO2 that we breathe out, plus excess inert gas should be flushed out the bottom of the bag through the slight gap. If I understand correctly.
Does the body still produce CO2 if I'm breathing only inert gas though and no oxygen?
Yes, you understand that correctly. Don't worry about any "slight gap," though; the elastic has enough stretch that even the low, consistant pressure of the gas flowing into the eb is perfectly adequate to vent excess N2 and allow that venting to carry off the CO2.
CO2 is a natural product of human metabolism and has very little to do with whatever gas is mixed with the O2 we need. As an example, ultra-deep divers use "heliox" --a mixture of helium and oxygen-- when working at extreme depths, rather than compressed air, which is effectively a nitrogen-oxygen blend. Those divers still produce CO2.
What you're doing when you put that N2-filled eb over your head is immersing yourself in an atmophere where there is no O2 to replace the O2 already in your bloodstream. But there's still a lot of O2 flowing through your veins, that you've already been breathing in for the entire day. The process of asphyxiation is about giving your body time to release all that O2 --in the form of CO2-- without it being replaced by new O2.
You will continue to produce CO2 until your very last breath, because that's what breathing is about: exchanging CO2 for O2. For that matter, your cells will still continue to produce CO2 even after you're technically dead: CO2 is part of metabolism on a cellular level, and even when your circulatory system shuts down, cellular function will continue until all the cells themselves run out of any residual O2 still in your body. Your brain needs an enormous amount of O2, so it will shut down relatively quickly and take the rest of your system down with it, but your muscles, intestines, whatever, that don't need as much O2, will still keep rumbling along , producing CO2, for a few minutes anyway. There just won't be any blood flow to carry the CO2 to your lungs where, had you not decided to ctb, it would be exhaled.