Hello Chris
Essentially, if you use the FastEthernet interfaces to interconnect BGP, then the routers are considered directly connected and you wouldn’t need to use multihop. However, because we are using two redundant links to connect the two routers, if we use the fastEtherent interfaces, and one link goes down, then the BGP connection between them will also go down, thus rendering the redundant link unusable. This is why it is preferable to use the loopback interfaces. However, If you use the loopback interfaces, you can see that these loopbacks are not directly connected to each other and thus require an additional hop between them. This is why multihop is necessary. This is reinforced by the fact that a value of 2 is used for the TTL which would be the number of hops, counting each router as one hop.
I hope this has been helpful!
Laz