Like Patrick, I’ve seen the dark side of loyalty first hand. Officers who should be drummed out of the service, instead being promoted because they have the right friends (above 1 star…). The transgressions of a squad of SGMs overlooked simply because the CG didn’t want the organization as a whole to look bad. The SPC who falsified a report when he was on duty with an active duty SPC, who did something dumb. 

These shallow examples of loyalty show just how truly pervasive the idea can be. However I don’t think loyalty itself being first in the order of the Army values makes it more prominent; I simply think it’s there because the L makes for a good first letter in a catchy acronym. I honestly think all of the values work in concert, one building and strengthening the others, and if need be, reigning them in in order to prevent unethical behavior.

As the article suggests, loyalty may be overvalued overall, however undervaluing loyalty can be just as detrimental. A sense of duty is a fine thing, but if you have no sense of loyalty to the unit, your command, or the Army, it’s hard to find the motivation to get things done. I’m sure there are formations out there where there is no loyalty, and it shows. Soldiers bounce and transfer the minute they see a chance. No one can find time to attend a needed school or new equipment training. Without loyalty, respect is hollow or lacking, with Soldiers BG&C to anyone who will listen because they don’t care about actually trying to find a solution to the problems of the unit. Why? Because they have no loyalty to the unit, leaders, or people in it. 

It’s not a fine line, but the line exists. Like @logisticus stated and the article mentioned, loyalty should be thought of as hierarchal, starting with the Constitution and the American Tax Payer, and ending with your Soldiers. However it shouldn’t be thought of as a value in a vacuum.

Loyalty strengthens a Soldier’s sense of duty; Soldiers will go out of their way to help someone or an organization they feel loyalty for/from. They are more inclined to put their necks on the line for a cause and or the people above, below and to their left and right (selfless-service/personal courage) if there is loyalty. Loyalty breeds and is strengthened by the respect of those you are loyal to; subordinates, peers, superiors and organizations. But it’s INTEGRITY that keeps loyalty in check, by not allowing a Soldier/Leader to take one of the dark paths discussed on this thread or in the article.  

However it is and should be Honor above all else. All the rest of the values combine to make an honorable, ethical Leader.