You're awesome for creating this discussion, which has been skirted in various recent blogs and discussions. I started writing a blog entitled: The Emporer Has No Clothes! about this very issue, but wasn't sure what to write. This is exactly the discussion GovLoop needs right now... where do we place the GovLoop button? Govloop: Government to Government? Government to Citizen? Citizen to Government?
I think a true "loop" would be a circle connecting any configuration of citizen and government, as long as the arrows are reciprocal, and at least one of those reciprocal arrows is between citizen and government.