The rule itself is not a loophole.

To use legitimate interest as a reason to process data you need you be able to argue that you do actually have a good reason to do so and that the user would expect you to process it.

For example, I think that websites have a legitimate interest in anonymously tracking your browser behaviour to analyse performance data and errors so that they can improve their app.

The loophole is that advertisers use it to process way too much data (when they are pretty much the reason for the bloody law in the first place) and that nothing is done about it.

I know right? Now, I'm not a lawyer, but it seems interesting because of what it isn't. 1a through e are consent, needed for business, legal obligation, (your) vital interests or another being, or public interest/authority.

So after all that, you have to figure... what legitimacy's left?

GDPR is pretty airtight in general, so I'm guessing we're missing something.

Edit: Hmm, it looks like the definition is left up to the courts of individual countries. That's not great.

Just a reminder that there's never such a thing as "a loophole". What there is is a carefully-worded, innocuous-sounding phrase that some corporation "helpfully" got added to a law or regulation (usually "for clarity"), and which the corporation already plans to mis-use in a given way should the appropriate circumstances arise (and in contradiction of all "we should never do that!" protestations they might make prior to the law or regulation taking effect).

Again, there is no such thing as "a loophole".