I was just trying this out at the Fruit Stand and I guess I misunderstood what you suggested. I launched "Videos" and then scrolled down to music videos but once they started playing I had no control over it except for pause, rew, & ffwd.
What am I not getting?
Okay, in iTunes on your COMPUTER, not iPod Touch, locate the video you want to be able to repeat, right click, click "Get Info," click on the "Video" tab, and change "Video Kind" to "Music Video.". Now sync your iPod Touch, make sure in the 'Movies' tab it says 'sync music videos' & 'sync movies'.
Now, go to your iPod Touch, press on 'Music', hit 'More' and then 'Music Videos'. Choose the one you want to play.
Now, turn it landscape, and bring the controls back up y tapping the screen. In the left-hand corner, press the continuous arrow button TWICE to display the continuous arrow in blue with a '1' next to it. Now it will repeat the video over and over again until you press 'done'.
Make sure the iPod Touch is PLUGGED IN so that your battery does not die if you are mounting it in a box or something, also that it has adequate ventilation too, as it does get warm! Also, you'll want the screen brightness up too probably.
If you can't get it to work let me know, I will post pics of me doing it if need be.
SuperMacMan