The word "loony" comes from the retarded superstition that staring at the moon will make you batshit crazy. It can mean one of 2 things:
1)Someone who disagrees with you, and who you do not wish to speak to or listen to. This term can be used by nancy boys and douchebags such as fundies, generally to refer to lib'rals.
2)Someone who is demonstrably delusional or psychotic. Often these people will disguise their psychosis as a political ideology, generally blaming various groups of scapegoats for all their problems based on negligible or nonexistent evidence.
Famous current loonies include: Ann Coulter, John Ashcroft, Rush Limbaugh, Jerry Falwell, Pat Robertson, Osama bin Laden, and all other fundies, Nazis, and people involved with (or seriously believing the rhetoric of) the Church of Voodoo Pharmacology.
The most common relatively sane person to be an alleged loony is Michael Moore, who contrary to Republican beliefs is not actually insane, but simply obese and incoherent.