Today, I observed a specific user whose avatar was stuck in the loading avatar for a long time, then became an error avatar. Attempting a hide/show avatar just resulted in the same - long loading avatar, then changed to an error avatar. Some other users in the instance reported they had the same problem on open beta, and were able to see the user in question after reverting to live.
I've attached the output log below; the user in question was おちゃ around 7am local time.
They did change to another avatar at one point, which I was able to see, but when they switched back it failed to load again.