"Show that if $P$ is a hyperbolic point, a neighborhood of $P$ in $M \cap T_P M$ is a curve that crosses itself at $P$ and whose tangent directions at $P$ are the asymptotic directions."
This is question 2.2.21c of Shifrin's Differential Geometry (link). We are being hinted to work in the coordinates $(x, u)$ with $y=ux$.
We first assume $P$ to be the origin, $M$ locally the graph $z=\frac{1}{2}\left(k_1x^2+k_2y^2\right)+\epsilon(x,y)$, where $\lim_{x,y\to0}\frac{\epsilon(x,y)}{x^2+y^2}=0$, $T_P M$ the $xy$-plane ($z=0$), and the $x-$ and $y-$axes are the principal directions at $P$. When we change coordinates as hinted, we get that the intersection has the equation $\frac{1}{2}x^2(k_1+k_2u^2)+\epsilon(x,ux)=0$, which holds if $x=0$ or if $x\neq0$ and $\frac{1}{2}(k_1+k_2u^2)+\frac{\epsilon(x,ux)}{x^2}=0$.
The condition $x=0$ refers only to the point $(x,y)=(x,ux)=(0,0)$ which is not a curve so we discard it. We are now assuming $x\neq0$. As we want to study the intersection in a small neighborhood of $P$, we take the limit as $x$ approaches $0$. We get $\frac{1}{2}(k_1+k_2u^2)=0$, i.e. $u = \pm\sqrt{\frac{-k_1}{k_2}}$.
If I understand correctly, we get two values of $u$, each corresponding to the limit of $y/x$ for the points $(x,y)$ of a curve as $x\to0$ (so as the curve gets closer and closer to the origin)? So $u$ would be the slope of the tangent line to the curve at $P$, in the $xy$-plane?
Therfore we get two directions: $v=\left(1,\pm\sqrt{\frac{-k_1}{k_2}}\right)$. We can verify easily that $\mathrm{II}_P(v,v)=0.$
I think it works, but I'm not sure I understand the meaning behind the change of coordinates (I don't know what's blowup) or the limit (we are near $0$, but not at $0$).