When does こいつ refer to a situation?

Question

I've always heard こいつ refer to a person. (That guy!) However, in my JLPT Reading workbook there is a line where it refers to a situation. The explanation says:

「こいつ」が状況を表し．．．．ことに気づくこと。

It goes on to say two of the answers were wrong because they referred to people.

I got the answer correct because it "felt right", but I really don't understand the explanation. Is this a different こいつ? Is this a common usage of it?

The passage is about a group that got lost in the woods picking mushrooms. The narrator climbs a tree to find the way back.

こいつはまずいと思って、俺はナラの大木に登って．．．．

The question and answer are:

「こいつ」とは何を指すか。

〇　変な場所にいるわたしたち

Answer 1

こいつ as well as これ can be used to refer to a situation, and you can rephrase the line as 「これはまずいと思って、俺はナラの大木に登って・・・」. こいつ sounds more colloquial, blunter and maybe more masculine than これ. 岩波国語辞典 states "こいつ = このやつ。｢これ｣の乱暴な言い方。「こやつ」の転。".

岩波国語辞典 also states "これ ②今話題になっている物・事をさす語。「一夜のうちに大木になった。おじいさんはこれを見て驚いた。」"

(Btw, I think the answer to「こいつ」とは何を指すか should have been written as more like 「わたしたちが変な場所にいること」.)