I created an animated movie mpeg-1 for testing, and it loops just fine if I define the movie and show it on a displayable (even though it tears like crazy because it's 800x600).
But when I just use the cutscene function, it only plays once and stops:
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$ renpy.movie_cutscene("handmovie.mpg", 2.25, -1)
I know the movie is fine, because it loops when I use the displayable:
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$ renpy.movie_start_displayable("handmovie.mpg", (800, 600), -1)