I loop for 1&2 --> 7&8 would be for DDS (56K), ATM over copper, possible audio / video (would depend on the BALUN/Adapter).
That would be considered a "hard loop." With a T1/DS1, there's a NIU/"SmartJack that terminates and provides a demarcation point on the line at the customer premises. The NIU/SJ can be commanded to loop at either side (customer side or provider side).
A DDS/56 line doesn't have a "smartjack" ... it's just copper that terminates at a biscuit block ... to put up a loop (for testing), the CSU/DSU can be commanded to loop, or a loopback plug can be put into the jack.
Once the loop is established, the provider / telco can send bit patterns down the line, and get 'em back to compare in order to judge the quality of the connection.
FWIW
Scott