For example, I have one main GRUB installation, and I want to have a menu entry in there that boots me into a second GRUB installation.
This is probably an XY problem. My main GRUB installation doesn't let me use the loopback command. It just says that the loopback command isn't found, and yes, I did try using the module 'loopback'. I think that the problem has something to do with the fact that I have an encrypted boot partition. So my 'solution' is to install a second GRUB, which I boot into through the main GRUB menu.