My understanding is that the origin is French and that the US pronunciation of loo is closer to the original than lef. Maybe has some connection with "in lieu of".My son's 6th class teacher argued with my son that it was pronounced 'loo-tenant' American style because it was spelled (spelt) 'lieu'.
It is an odd one - I wonder what its origins are. Perhaps 'lief'?
The ABC refers to American military personnel at 'loo' and Australian/UK as 'lef'. Those journos over 45 anyway.