The script requires 3 to 4 free loop devices, so is not yet suitable for use

within a booted LiveOS image.

Is that really an issue? These days you can mknod as many loop devices as you like:

for ((i=0;i<128;i++))
do
    [ -e /dev/loop$i ] || mknod -m 0600 /dev/loop$i b 7 $i
done

James