What is the purpose of this loop in a taxiway?
In the US, this is called a "run up area". It is used by small piston powered airplanes to test their engine prior to takeoff.  

The circular design allows several aircraft to full throttle their engines without the prop blast hitting the aircraft behind it. It also allows other aircraft like a business jet, to pass the testing aircraft and takeoff immediately.

Larger aircraft or turbine powered aircraft don't usually test their engines near taxi-ways and other aircraft (or aren't allowed). If they need to test their engines, a special blast "pen" or blast "barrier" is used.



Youtube video of a FedEx engine test.





This Youtube video of a airplane landing shows a ground view of the significance of the hills and mountains off the departure end of 36. 



Why the run-up is at this end - Google Earth 3D