I wonder why you are not automaticly creating the initrd file after a kernel installation as it can leave the system in a reallly broken state. kernel RPM can be installed too with a -U option, as a consequence the old kernel is removed and mkinitrd can not be used anymore as loop.o was deleted ! RPM spec files would perhaps benefit of a way to restrict install option (install only, update only or install & update).
Our current source tree does a modprobe loop in the preinstall so that the loop module will be loaded and mkinitrd will work.
I just upgraded my kernel with rpm's -U option from both 2.2.14-5 and 2.2.16- 22smp to the 2.2.17-14smp. Immediately afterwards, an lsmod showed no loop module loaded.
Oops. I only added it for the uniprocessor kernel before. I have just added that for the smp and enterprise kernels as well. Will be fixed in the next 2.2 kernel we release. Thanks for pointing this oversight out.
Since we have released errata kernels after my last comment, I am closing this bug report.