Several things might be wrong. Webpack 2+ no longer accepts top level options in a rule definition. Custom options have to be in the options object. If you're using Webpack 2 or higher, check that that loader it's compatible.
Shimming might be what you're after instead of this loader. You can also make derived configurations for different environments using webpack-merge where your test environment doesn't shim react and your prod configuration does.
Like @Sebastian mentioned, code splitting would eliminate the redundant references to React. For more advanced situations with extracting and sharing code bundles, there are also DLLs.