I am not sure about the loop, but wouldn't a static or default static route specifying an outbound interface rather than a next hop router ip address on a multi-access network like Ethernet, frame-relay or ATM with connections to 5 or more routers cause one router to output a stream of packets to a subnet and all five or more receiving routers receiving the packets possibly forwarding them separately causing the duplicate packets?
Just a thought,
Matt Rice
Seattle