Although you might be disappointed, the truth is that one method is not necessarily superior to the other. Direct recognition versus non-direct recognition is more a game of smoke and mirrors used by the insurance companies themselves to keep your focus away from what is really important. In fact, there are good and bad insurance contracts in both direct and non-direct recognition insurance companies.
When you take a loan from your Infinite Banking policy, the money is lent to you by the insurance company and it comes from their general account. Your cash value remains in your policy and it continues to earn interest and dividends while collateralizing the amount of your loan.