It sounds like you are just looking to create a segment and use the segment results for a race? People do that all the time. Yes, just ride the loop and create a segment from that in Strava. It will pick up every activity that has ridden that loop, so if you want to use the Strava leaderboard for the "race" results, you will want to just look at the "today" leaderboard at the end of the day. Make sure to remind everyone racing to upload their files right after the event and make their activities viewable to "everyone" so they show up in the leaderboard. If they wait or leave their files as viewable to just them or their friends, they won't show on the public leaderboards. The medals that the leaderboard show will be applied to everyone who did the segment, so if you want to limit the event to just a set list of people who signed up, then you will have to sort those out manually.
