So the workaround seems to be: In Loupe, do the menu command View > Loupe Overlay > Grid, and from then on the command View > Loupe Overlay > Show and its shortcut Ctrl Alt O work correctly.
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On the other hand, the workaround doesn't work in Develop. There, the menu command View > Loupe Overlay > Show is not greyed out, and it works correctly. However, the shortcut Ctrl Alt O doesn't work (Windows).
The problem is that LR 13.4 assigned the same shortcut to two different commands in TranslatedStrings:
The latter is used by View > Loupe Overlay > Show in both Library and Develop.
* On Windows in Develop, Ctrl Alt O toggles Remove > Object Aware, regardless of whether the Remove panel is open.
* On Mac in Develop, Cmd Alt O invokes View > Loupe Overlay > Show, regardless of whether the Remove panel is open.
A workaround is to use the Any Shortcut plugin to reassign the shortcuts -- it will be updated to LR 13.4 no later than tomorrow.
The product team really should use Any Shortcut to manage LR's shortcuts -- it would have detected this error before release (as well as the dozens of other errors I've reported in the last couple of years).
Screenshots showing the multiple assignments of the shortcut in Windows and Mac:
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