The loop is an inductor and is used in an LC (Inductor - Capacitor) or LR (Inductor - Resistor) circuit to an oscillator. When any Ferrous metal is moved close to the coil, the inductance of the coil increases and the frequency of our oscillator decreases. The drop in the frequency in the oscillator tells the traffic light that there is a car waiting.
I just don't see how a small, but strong magnet will change anything in this system. Keep in mind that there are a lot of hoaxes on the internet and this could be one of them. (The video of using cell phones to make popcorn pop is a good example.)
The problem is not the technology, but the sensitivity of the system. Someone from the city may not have adjusted the system properly and it takes a lot of ferrous metal to trip the detector.
I'd love to run several tests on our traffic lights where I live, but right now I have my hands full teaching electronics classes at El Camino College. Maybe during the summer break, I'll run some tests....
Bob Diaz