Laurie, I have had personal experience with toddlers who bite down while
nursing to sleep.I will tell what worked for me.
First, last winter I had my 18 month old actually bite off a tiny piece
of the skin on the end of my nipple when he was nursing to sleep. It is
hard to believe just how painful  this can be! For a day or two, I
continued to nurse him on that breast, but finally I had to stop- it was
just too incredibly painful, I couldn't stand it. So, for the next few
days, while I waited for the healing to occur, I manually pumped the
affected side , and continued to nurse on the other side. If this were
to happen to a mom who was nursing a younger baby, I might suggest that
they rent an electric pump for a few days to really make sure to keep up
the Milk supply- it depends on how successful one is at manual pumping.
I just happened to have a manual pump around, and it worked out well.
The pumping did not bother my sore nipple at all, since there was no
actual contact between my nipple and the pump. (with  my son nursing, of
course there WAS contact between my nipple and his mouth.)

The other thing I did was to apply a bit of L_n___oh a few times a
day.(I happened to have a few samples around ). I can't say that it
definitely speeded up the healing, not having experienced this exact
situation before, but it certainly did not hurt.From what I've read
about moist wound healing, it seemed like a good thing to do.
After a few day of the pumping, things healed sufficiently to go back to
nursing on the affected side.

As to the general topic of toddlers biting down: This happened
particularly with my second child, I don't recall it being a regular
occurrence with the first child. After a few times of my son really
clamping down as we both drifted off to sleep, resulting in me waking up
yelling and maybe even bleeding a bit (as he continued to blissfully
sleep), I figured out that I had to be sometimes quite aggressive
(relatively speaking, of course) about unlatching him before he really
clamped down. I couldn't let myself doze off until he was unlatched. I
got pretty good at noting the gradual relaxation of his jaw, and
figuring out the critical time when I had to unlatch him- or else risk
injury!! I would really have to insert my finger back where the molars
are and sort of pry open his jaw.
I don't think my third child (and current nursing toddler) clamps down
as much as his brother did.I don't think this is that uncommon, you just
have to be on the look-out and get that nipple out of there! by the time
the jaw is relaxing to this extent, the child is quite asleep and I
think  quite unaware of what you are doing.
Hope this is helpful to you.

Ellen Vegh, LLLL
Pittsburgh, PA ( lots of lovely snow here-but that shoveling really does
me in!)