It would not surprise me if that was the case.
I do get that "video paused" popup every once in a while, but I have never seen the looping behavior.
If this is happening to you a lot, a cool way to get around it can be using mpv/youtube-dl, they both support YouTube playlists:
mpv --no-video https://www.youtube.com/playlist?list=PLThlnilAqSEtI9HNfZEEy...
or
mpv https://www.youtube.com/playlist?list=PLThlnilAqSEtI9HNfZEEy...
The --no-video flag hides the mpv OSC (a simple GUI, which is not necessary if you're playing songs). To navigate the playlist you'll need to learn a few keyboard shortcuts (<, >, ENTER, p), and more:
https://mpv.io/manual/stable/#keyboard-control
This works very well and is multi-platform.
Unless YouTube puts DRM on the whole site, this should continue working as long as you keep mpv or youtube-dl updated. Sadly I don't think we can know for sure if they're doing this on purpose.