The loophole is that it only refrains you from making a weapon based on intent. Could you, for instance, convince yourself that you are making said weapon for one man to protect another, or for a man to kill shadowspawn?

Of course its a plot contrivance, that is obvious. The question is whether its believable. The POV's that we have believe the oath rod is infallible, but is it? If it is not, then perhaps oaths that have some loophole of sorts are more binding than ones that don't. We know what happens when one tries to go against their oath, we have seen many examples, but that doesn't mean that the will of the person cannot overcome the power of the rod, given certain situations.