Let $\mathcal{C}$ be the hyperbola $y^2 - x^2 = 1$.  Given a point $P_0$ on the $x$-axis, we construct a sequence of points $(P_n)$ on the $x$-axis in the following manner: let $\ell_n$ be the line with slope 1 passing passing through $P_n$, then $P_{n+1}$ is the orthogonal projection of the point of intersection of $\ell_n$ and $\mathcal C$ onto the $x$-axis. (If $P_n = 0$, then the sequence simply terminates.)

Find the number of starting positions $P_0$ on the $x$-axis such that $P_0 = P_{2008}$.  Your answer should use exponential notation, in simplest form.
Let $P_n = (x_n, 0)$. Then the $\ell_n$ meet $\mathcal{C}$ at $(x_{n+1}, x_{n+1} - x_n)$. Since this point lies on the hyperbola, we have $(x_{n+1} - x_n)^2 - x_{n+1}^2 = 1$. Rearranging this equation gives \[
x_{n+1} = \frac{x_n^2 - 1}{2x_n}.
\]Choose a $\theta_0 \in (0, \pi)$ with $\cot\theta_0 = x_0$, and define $\theta_n = 2^n \theta_0$. Using the double-angle formula, we have \[
\cot \theta_{n+1} = \cot( 2 \theta_n ) = \frac{\cot^2 \theta_n - 1}{2 \cot \theta_n}.
\]It follows by induction that $x_n = \cot \theta_n$. Then, $P_0 = P_{2008}$ corresponds to $\cot \theta_0 = \cot ( 2^{2008} \theta_0 )$ (assuming that $P_0$ is never at the origin, or equivalently, $2^{n} \theta$ is never an integer multiple of $\pi$).

So, we need to find the number of $\theta_0 \in (0, \pi)$ with the property that $2^{2008} \theta_0 - \theta_0 = k \pi$ for some integer $k$. We have $\theta_0 = \frac{k \pi}{2^{2008} - 1}$, so $k$ can be any integer between $1$ and $2^{2008}-2$ inclusive (and note that since the denominator is odd, the sequence never terminates). It follows that the number of starting positions is $\boxed{2^{2008} -2}$.