I haven't seen that kit in a long time, so I'm not sure just how the instructions tell you to rig the boats. It sounds, though, like Revell has tried to simplify the rigging of boat davits and, in the process, has (a) created a rigging system that doesn't make sense, and (b) actually made the job more difficult than it needs to be.
The rigging of boat davits actually is pretty simple - though it's a little tricky to explain without the help of a diagram. It varies a little according to the size of the boat, but the principle is the same.
The rigging at each end of the boat is identical, so let's just talk about one end. There are two pulleys (usually called "blocks" in nautical-speak), one hooked to an eye on the end of the davit and the other hooked to an eye in the bow or stern of the boat. (If you're using the blocks that came the kit you'll probably tie them to the davit and the eyebolt in the boat, rather than hooking them.) The upper block (the one on the davit) has an eye (called a becket) on its lower end. (The Revell kit, if I remember correctly, contains single-sheave blocks with beckets on one end and on both ends. You want one with two beckets for the upper block, and one with a single becket for the lower block.) The line (called the boat fall) is secured to the lower becket on the upper block. It then runs down through the sheave in the lower block, back up and through the sheave in the upper block, then inward to some point where it can be reached by a sailor on the ship's deck. I seem to recall that the davits of the Kearsarge have little cleats molded into them - about halfway up. The davit fall gets wrapped around the cleat three or four times in a figure-8, and what's left over (quite a few scale feet) is coiled up neatly and hung over the cleat.
When it's time to lower the boat, the boat crew scrambles over the ship's bulwarks and into the boat. Two guys on the ship's deck, one at each davit, cast off the falls and ease them off, causing the boat to descend gently into the water. When it's afloat, the sailors in the boat unhook the lower blocks and the boat goes on its way.
Those "loops" described in the instructions don't make sense. They'd keep the boat from moving up and down. Nineteenth-century seamen were rational beings. They set up the system in such a way that it was easy to adjust the falls, so the boats would hang level and at the same height.
A convenient, reasonably quick way to deal with this problem on a model is to rig the tackles before mounting them on the ship. Pin the two blocks to a piece of something or other (this is one of the few places where balsa wood comes in handy in serious ship modeling), the correct distance apart. Rig the tackles, then pull out the pins and tie the blocks to the davits and the boats. Belay the ends of the falls and you're done.
One small - unsolicited - suggestion. That kit, if I remember right, uses plastic parts to represent just about every fitting on the ship - including the blocks and eyebolts. Revell blocks aren't the greatest, but they aren't bad - they're certainly superior to the ones in Heller kits. But unless you enjoy the sound of breaking plastic, it would be an excellent idea to junk the plastic eyebolts and replace them with metal ones. The ship model fittings suppliers sell preformed brass eyebolts, but it's ludicrously easy - and quick - to make your own. You'll need a length of brass or copper wire of an appropriate diameter, a candle, and a steel mandrel of some sort. (If you've got a set of drill bits, #60 to #80, they'll work great. You can make eyebolts of lots of different diameters.) Put the mandrel (drill bit, piano wire, or whatever) in a vise. (If you don't have a vise, hold the mandrel with a pair of pliers.) Soften the wire by holding it over the candle for a minute. Then bend the wire around the mandrel and twist the ends into a "pigtail." Once you get the hang of it, you can turn out eyebolts faster than one per minute. Super-glue them into the appropriate holes in the model, and you'll be spared the frustrating experience of having your eyebolts snap at crucial moments.
Hope that helps a little. Good luck.