No (well, almost) sim scenario is ridulculous - have a look at some of the radar replays at LTCC or leaf through the accident report archives.
(Double engine fire AND gear won't come up? That'd never happen...except to concorde...)
Just because I flew a 'perfect' circuit (although I don't think I've EVER flown one of those) after a problem on TO, doens't mean I wouldn't be ready to listen to criticism of my decision after the event...I'd rather have the benefit of hindsight after a SIM session than need it in the real world!
Of course, my ability to process such criticism in a constructive manner would depend to a large degree on it's style of delivery. An intelligent discussion, perhaps based on something I hadn't realised: great. Someone telling me that I was 'wrong', with little useful feedback: hmmm...I may well be, but am unlikely to be convinced.
Though you didn't mention explictly the subsequent course of events in the sim, LEM, from what you say I would have thought more criticism would be directed at the resolution of the problem with a circuit to land, rather than (as most would prefer) as long a time as possible in the hold prior to landing, burning off fuel, becoming completely happy with the degraded handling of the aircraft, briefing full for an emergency landing etc etc. Total hydraulic failure needn't present any real problems flying the aircraft, but there is lot to be considered before starting an approach.
The other thing to consider, of course, is a failure of the low pressure warning system itself - though probably unlikely on both systems simultaneously. There may be time for the PNF or even (briefly) the PF to have a quick glance at the HYD Quantity & Pressure gauges to see if they present the same picture. Whilst time is indeed short on the takeoff roll, it may be far better to make the correct decision at 120kts than the wrong one at 100kts.
All just points for discussion, and unlike your TRE, I'm not prepared to say either I or your colleague are definitely right or wrong!