I presume you mean the following (much) weaker version of the pumping lemma.
Let $L \subseteq \Sigma^*$ be an infinite regular language. Then there are $x, y, z \in \Sigma^*$ with $y \neq \epsilon$ such that for all $i \in {\mathbb N}$, $xy^iz \in L$.
(The proof of this, using the usual version of the pumping lemma, is easy. Let $p$ be the pumping length, take a word $\sigma \in L$ with $|\sigma| \geq p$. Such a word must exist, because $L$ is infinite. By the usual version of the pumping lemma, there are $x, y, z \in \Sigma^*$ with $\sigma = x y z$, $y \neq \epsilon$, $|xy| \leq p$ and $xy^iz \in L$ for all $i \in {\mathbb N}$.
Note that it really is a much weaker formulation. The pumping lemma says that every sufficiently long word in $L$ can be pumped; this version only states that there exists a word in $L$ that can be pumped.)
However, for your language $L = \{ \sigma^2 \mid \sigma \in \{a,b\}^* \}$, although not regular, the claim of the weaker version of the pumping lemma does hold. You could take, for instance $x = y = z = aa$. Then $xy^iz = a^{2i + 4} = a^{i+2} a^{i+2} \in L$, for all $i \in \mathbb N$. So, you can't use this to show that $L$ is not regular.
Of course, as you noted, you can apply the usual version of the pumping lemma to $0^p10^p1$ to show that $L$ is not regular.