I don't really know why it is an actual loop of wire. Anyone know?
As an inductive tachometer, it doesn't measure the signal directly as do most (it doesn't touch the metal of the wire), but instead it just listens to it right through the insulation. Like how an inductive timing light clips around a spark plug lead
This means you can pick up the signal anywhere on the wire from the IGN switch to the coil. Fortunately, at the factory they cut the wire just above the headlight switch and connected it back together. So you can pull the connectors apart and plug the loop wire in, that way there will be no break in the wire to the coil, but now the tachometer can sense the current starting and stopping every time the points open. Many new tachometers still work this way
You can even detect the signal on the other side (between coil and distributor), but why bother as you'd have to run the wire all the way there and back. When you can just get the signal off the closest dash wire ...