CO2 is generated by cellular respiration. This is essentially
independent of oxygen, as a matter of fact, anaerobic respiration can
occur in the absense of adequate oxygen, but it is VERY inefficient, and
makes LOTS of waste products.

Arterial CO2 concentration, having left the lungs, is around 35-45 torr
(mmHg). In mixed venous blood, returning to the lungs, it is around 50
torr/mmhg or so.

At sea level, atmospheric CO2 is in the high 20's/low 30's mmhg. The
body's buffer system in a healthy individual will RAPIDLY move the CO2
level back towards normal if it vary's too much from those values. So,
even at altitude, your venous blood gas values are pretty much normal
after one pass around the body. You hold your breath, and this blood
with "venous" levels of CO2 will make a second pass, and when it hits
the chemo and baro receptors in in your carotid (artery) bodies you will
start getting that URGE to breath.

All of this is independent of how oxygen is handled by the blood. Each
gas's function in the body is more or less independent of each other.
Even though your body uses oxygen to make CO2 as a waste product, your
body will continue to make CO2 for a short time without adequate oxygen.
As an example: the burn in your muscles after a sprint - lactic acid
generated along with CO2 when the oxygen requirement of the muscles
outstrips the oxygen supply.

To say "the lungs stop working" is at best, technically inaccurate. You
are just too hypoxic to make the muscles responsible for gas exchange to
work properly.

Dave