[CrushinFelt]

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What I'm trying to grasp is a more theoretical concept of what happens when you take a long position on a random stock vs taking a random short position.

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Ok.

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In the first case, you are giving up the use of funds to get a return, much like a CD or bond. But since the risk is higher, your returns are better.

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Pretty much.

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When you short, it's as if you're the one taking out a loan,

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Sort of... you borrowed a stock from someone and sold it at the current market price and you are to return that stock at some point in the future by buying it back (hopefully at a lower price than you initally sold it).

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but now you're paying the high-interest (market return)

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I sure hope you don't expect to do this; the point of selling short is because you think the return on this stock will be negative.