Hi badhatsam, thanks for your post and your solution!
I have a couple of suggestions that may helpful in this context.
The first is to help with future-proofing your customization. If you decide to update the plugin, there’s a good chance your customization will be overwritten and lost. To avoid this, you can create a copy of that posts_loop_template.php file and place it in your theme directory. That custom template should take precedence over the default one that comes with the plugin. Even if you update the plugin, your customized template in the theme directory should continue to be used.
The other suggestion relates to your original question about HTML in the post excerpt. Your solution of replacing the excerpt with the complete content of the post DOES work, but there’s another solution if you only want the shorter excerpt to show, and don’t want to edit the plugin template.
It’s normal behavior for HTML to be filtered out of the Excerpt by default. However, if you enter content in the Excerpt field on the post editor, this will be used in place of the default excerpt. When you use this, it should allow you to add html such as links, etc.
Quoting from the Codex…
To add an excerpt to a post, simply write one in the Excerpt field under the post edit box. An excerpt can be as short or as long as you wish. Usually, given its purpose, a couple of sentences is fine. If adding the excerpt manually, you may use (some) HTML formatting and the tags will not be stripped.
Note: As of WordPress version 3.1, some screen options on the Post & Page edit Administration Panels are hidden by default. The Excerpt field is hidden by default if it has not been used before.
Hope you find some of that helpful. ??