You borrow $10k from your 401k and what exactly do you believe occurs?

$10k is subtracted from your pre-tax dollar 401k balance and $10k in post-tax dollars get deposited in your bank account. Pre-tax dollars have been converted to post-tax dollars without a taxable event occurring (assuming the loan is paid back in full and doesn't become an early distribution).

You repay that loan with an equal $10k amount of post-tax dollars plus interest.

No double taxation on the principal because you received post-tax dollars and repaid post-tax dollars.