At the end of my last loop the game allowed me to sacrifice things I hadn't picked up during the loop but were in my inventory because they were infused. I don't know if that's normal, I didn't really think about it, I just sacrificed stuff because they were infused, I figured they would come back. That stuff is permanently gone from my inventory now, including slabs, weapons, trinkets... I've lost so much progress. Am I an idiot or is this expected behavior?

I dont think is a bug, and it happened with me before. Sacrifice only the items that you have not infused already but are the same you have in your inventory. if you just started the game dont worry much about it as most of the best items that you will get earlier on will be from Players(if you allow it) that invade your game to protect the loop. everything else you can find in the same places you got before.

Yeah it isn't a bug. You can sacrifice anything at any time, but once you sacrifice it it's gone for good.
So don't sacrifice infused items unless you're certain you don't need them or can get them back later!