All other questions aside, does this count as evidence that the AGPL closes a real loophole in the GPL?

It looks like at least in this case, Google is hysterically anti-AGPL, but would actually welcome a switch to the GPL. Which, from a certain viewpoint, looks like an argument that the GPL is insufficient.

I don't remember any hysteria. I do remember that they are strict about following the terms of software licenses, sometimes going beyond what most open source tools do. And being strict about this is a good thing, no?

You can see a bit of that in Bazel:

https://docs.bazel.build/versions/master/be/functions.html#l...

You don’t see why forcing the open sourcing of the entire Google codebase would be a problem? That’s essentially what GPL does, if you use even a tiny portion of it for your code and they prove it, you have to GPL ALL the source code from the same for base.