Regression to the mean can work with non-contious variables. Sticking with the potty training example call using the toilet properly a 1 and failing to use it properly a 0. If a baby has a a fairly stable tendency to use the toilet 3 out of 4 time that the situation comes up the baby would have a mean of .75. If you observe a 0 from the baby you should expect the next time to be closer to the mean, which would mean a 1.