Regardless of the looping question, you shouldn't be allowed to do this because the library is a hidden zone and you can't specify the location of any cards after a shuffle.
I think we've all been pretty clear about why this is a valid loop. There's no "regardless of the looping" question here. The player going off can name a specific number after which he will have stacked his library any way he wants. Petal doesn't shuffle. If it did require you to shuffle, then you'd be absolutely right because the order of the deck would change randomly (at least in part) and you would no longer be able to name a specific, finite, upper bound on the number of iterations you need.
That's the key. When you want to do a loop, ask yourself:
(1) Can I specify an EXACT number of iterations?
(2) Can I explain EXACTLY what the board state will be after those iterations with 100% accuracy?
If you can do that, then go ahead and propose your shortcut.
I think you're mixing up two ideas. It's true that the player does not know how many times he or she NEEDS to execute the loop. They might find what they need right on top after the very first Petals! But, that's fine. The player knows that if they repeat the loop 400k times (or so) they are guaranteed to be able to arrange their library how they like it. This might be more iterations than ultimately necessary, but so what? You don't need a million pestermite tokens to kill people, but there's no problem with doing it.
There's a bit more to the shortcut rules than 719.2a.
Most of the time shortcuts are taken by consensus:
719.1a The rules for taking shortcuts are largely informal. As long as each player in the game understands the intent of each other player, any shortcut system they use is acceptable.
I was talking about the original question, not the Petal of Insight question. You can't "mill to Emrakul and shuffle your deck until Emrakul is on the bottom" even if you have a valid loop because you can't tell Emrakul is on the bottom of a shuffled library without performing illegal actions.
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