It is not a loophole. This is intended to allow those who wish to fly single-seat aircraft to continue to do so, as they would otherwise have to obtain a two seat aircraft to carry an instructor for the 'one hour with an instructor'. However, their class rating should be annotated as "Single Seat Only" on the Certificate of Revalidation.
ANO Schedule 7, Section 3 (and LASORS F5.3)
In the case of a certificate of revalidation for a class rating which is being issued on the basis of paragraph 1(b) of Table 2, so that the holder of the licence has satisfied the experience requirements but without having had a flight with an instructor as part of that experience, the person signing the certificate must endorse the certificate “single seat only”.
Note, it is annotated "single seat only" not "solo flight only". See ANO Part B Sub-section 2, Microlight Class Rating:
If the current certificate of revalidation for the rating is endorsed “single seat only” the holder is only entitled to act as pilot in command of any single seat microlight aeroplane.
Similar wording is included for SSEA and SLMG. I had a fairly lengthy discussion about this with BEagle a while back, because there was no defined method to then remove the single seat restriction. The "single seat only" endorsed pilot must complete the following:
To remove a Single Seat Only restriction included in an NPPL, the applicant shall:
1. Undertake at least one hour of flying training with an instructor. This may be conducted on any Class/classes for which the applicant has a valid Class Rating.
2. Present his/her licence to an Examiner to have the 'Single Seat Only Restriction' amended. The Examiner shall:
2.1 Enter the same Rating revalidation details as for the existing rating(s), omitting the 'Single Seat Only' restriction(s).
2.2 Enter the validity date(s) as for the current rating(s).
2.3 Sign and complete his/her details.
See BEagle's post on the topic here:
http://www.pprune.org/private-flying...striction.html
I'm surprised that this has not been included in the NPPL AIC.