loop-aes expects/is intended to patch losetup and mount from util-linux. But on Gentoo our packaging leaves these alone, instead installs loop-aes-losetup and does not bother with a loop-aes-mount. Starting with loop-aes-3.7w I added changes to the initrd generation script to explicitly call losetup and then mount, to work around incompatibilities. However on an already-installed system where the initrd is rebuilt, this ends up calling the unpatched losetup which does not handle the loop-aes-specific arguments. Instead, build-initrd.sh needs to check for and prefer loop-aes-losetup if it is present.