I did additional testing, and I can confirm that adding "rmmod tpm" does
indeed work...

See comment number 51 by Alkis
(https://bugs.launchpad.net/ubuntu/+source/grub2/+bug/1851311/comments/51).

    - - - - - - - - - - - - - - - - - - - - - - - - - - - -
    menuentry "Install" {
        set isofile="/ubuntu.iso"
        rmmod tpm
        loopback loop (hd0,2)$isofile
        linux (loop)/casper/vmlinuz boot=casper iso-scan/filename=$isofile 
noprompt noeject
        initrd (loop)/casper/initrd
    }
    - - - - - - - - - - - - - - - - - - - - - - - - - - - -

The Busy Box error I had experienced was actually due to a bad ISO file.

I tested "rmmod tpm" on a system running Ubuntu 19.10.

I tested two official Ubuntu *.iso files:
- Ubuntu 18.04
- Ubuntu 20.04

In both cases, the system successfully booted the specified *.iso.

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https://bugs.launchpad.net/bugs/1851311

Title:
  loopback command hangs in 2.04 under UEFI

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