They probably didn't lose their photos. Their photos are located in User/Pictures/iphoto library/originals. The thumbnails are only the small pics that are displayed in the iPhoto library pane. But, if they had data base corruption of some sort, that possibly could result in loss of photos. Or if there were a power outage or interruption while the thumbnail cache was being rebuilt.
It is always advisable to back up your iPhoto library before doing any sort of rebuild. And beforehand make a copy of your Library6.iPhoto file located in your iPhoto library file in case there is data base corruption. That having been said, I have rebuilt my iPhoto library lots of times with no problem. You might want to post your concern in the iPhoto forum.
