How does it work?

Hammer throw does 8 damage to an enemy and has overkill.

Overkill states "If an attack with overkill defeats a minion, excess damage from the attack (damage beyond the minion's remaining hit points) is dealt to the villian.

Loki states "Forced Interrupt: When Loki would be defeated, discard the top card of the encounter deck. If that card is a treachey, heal all damage from Loki instead."

So am I right in assuming that all 8 damage goes on Loki and excess damage only moves to the villain if he doesn't flip a treachery?

"How does Loki interact with overkill? If you do six overkill damage, would you “kill Loki” then assign the two to the villain, then activate Loki’s card ability to see if he revives?"

"The overkill damage would be applied to the villain before determining whether or not Loki revives." -Caleb|

Found this answer on discord, think someone emailed into the designers in regards to this.