So to clarify, because there is no difference between "he" and "it" in Romanian, this sentence could mean "I love him even though it is not smart (to love him)." and "I love him, even though he is not smart." Right?
Your reasoning is indeed correct.
If we would want to empathize that we are talking about him, we would say Deși el nu e deștept, îl iubesc.
So "nu e" can mean "he is not" or "it is not", but "el nu e" can only mean "he is not"?
That's one peculiarity of some romance languages... We do not need to express or specify all the time if we are talking about he, she or it, as in english.
Because our conjugations let us know who we are talking about, including the gender... it's a little bit tricky, but if you pay atention to the conjugation you will know exactly the meaning of the sentence.
The way I translated this is "Even though it is not smart, I love him" meaning that it is not smart to love him, but I love him anyway. It was correct, but the translation above says "although he is not smart"